Control Board outlines measures to fight Puerto Rico crisis
The Financial Oversight and Management Board for Puerto Rico has begun flexing its muscles in its ongoing dispute with current governor, Alejandro Garcia Padilla. After rejecting Garcia Padilla’s proposed fiscal plan, the board is now seeking drastic measures to address the ongoing problems the US territory is facing, this in light of new information which places the projected deficit at $10 billion more than previously indicated.
The board warned that Puerto Rico needs to take swift action because it faces a larger deficit than originally projected at $68 billion, in addition to nearly $70 billion in public debt the governor has said is unpayable and needs restructuring.
“Puerto Rico’s fiscal and economic problems are severe and could have dire consequences to its people and society if left unattended,” the board said.
Board members said the new projected deficit is $10 billion larger than the one included in a proposed fiscal plan that has become a point of contention between the board and Puerto Rico’s governor. The board last month rejected the plan submitted by Gov. Alejandro Garcia Padilla, who has refused to revise the plan to include any austerity measures.
In a 10-page letter sent to Garcia, the board said Puerto Rico should privatize certain government assets, implement labor, energy and tax reforms, seek public-private partnerships and cut non-essential services, among other things.
The board said it will identify those non-essential services in upcoming weeks, as well as point out ways to consolidate public agencies.
“Every month we wait represents lost opportunity for economic growth and Puerto Rico’s ability to recover,” said the board, which was created after U.S. President Barack Obama signed a rescue package for Puerto Rico in late June.
It stressed that Puerto Rico also needs to cut its education and health-care budgets, and said that furloughs and freezes across government agencies may be implemented.
The board also suggested charging tourists higher prices for services such as ferry transportation to the popular islands of Vieques and Culebra.
While there is much uncertainty as to what measures will end up implemented by the administration of Governor-elect Ricardo Rossello, you can expect severe austerity measures headed Puerto Rico’s way. With Republicans having a majority in the oversight board, as well as in the federal government, there will be little to deter the imposition of austerity in Puerto Rico.