Q1 2014: PR Still Moving Sideways

During the first quarter of 2014, the government remained in the eye of the fiscal storm. Despite the adverse impact of junk status of PR GO’s and other public corporations’ bonds, the PR Treasury Department and the Government Development Bank successfully sold a $3.5 billion GO bond issue. Of course, the interest paid was high but necessary, in order to fund the daily government operations and debt obligations. The current administration has also worked hard on several initiatives geared to restore growth and create jobs. Among these initiatives is the “Star Isle” tourism campaign, the Jobs Now Act, a new aeronautic cluster, and the proposed energy reform, among others. However, these valuable efforts appear to have been diluted due to a lack of coordination and difficulties to deliver a clear message. Individuals have been hard hit by utility prices and businesses face uncertainty regarding tax reform. In short, Puerto Rico still moves sideways with expansionary and recessionary policies, which cause a near zero net effect.