Revised Puerto Rico fiscal plan confronts complicated questions
In the wake of political standoff and debate, Governor Ricardo Rosselló of Puerto Rico introduced a revised fiscal plan for the territory. The revised plan, published on Thursday, April 6, remained controversial as massive cuts to previous funding have been outlined to hopefully pull Puerto Rico out of fiscal debt.
The newly presented plan posits a surplus in excess of $6 billion by the year 2023, with a total surplus of $7.36 billion following the inclusion of non-recurring items. However, there remain those who challenge the plan, arguing that the expectation models are overly optimistic in the assessment of predicted economic growth and government revenue. Points such as these underscore the continued uncertainty surrounding the debt crisis facing Puerto Rico and the unpredictable path towards economic recovery.
Progress has moved forward recently concerning fiscal planning for the future of Puerto Rico. On April 19, the Financial Oversight and Management Board of Puerto Rico released a statement announced the certification of Fiscal Plans of the Commonwealth for the Puerto Rico Electric Power Authority (PREPA) and Puerto Rico Aqueduct and Sewer Authority (PRASA) under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). Chairman of the Financial Oversight and Management Board, José Carrión, called the certified plans a “once-in-a-generation opportunity for Puerto Rico to turn around years of economic decline and fiscal mismanagement”. This plans seeks to underscore the position that financial issues facing Puerto Rico are both long-term and structural.
Revisions to the fiscal plan for Puerto Rico will bring about notable austerity measures however, leaving questions into the sustainability of the plan, as well as its ability to protect residents. Board member Ana Matosantos dissented on the decision to approve the plans for these same reasons, arguing that the measures would cut into the social safety net and disproportionately place negative externalities on already impoverished residents. One massive cut to spending scheduled to take place is one to public employee pensions at an average rate of 10%. The executive director of the board, Natalie Jaresko, however maintained that these cuts will ensure that pensions are able to be dispersed completely and in a timely manner.
As financial hurdles continue to present themselves, it is becoming increasingly urgent for major questions to be addressed and answered. The revised plan hopes to restore and improve both energy and water systems in Puerto Rico, a badly needed steps towards social and economic restoration, and work to stabilize public spending with the goal of reducing government indebtedness. These plans, however, provide no guarantees for economic growth and have the opportunity to negatively affect a massive proportion of Puerto Ricans. Undoubtedly, debate will continue as Puerto Rico works to move it’s economy forward in the wake of complicating financial and natural events, but as plans progress, residents, businesses, and public officials must continue to confront challenging problems in search of rewarding answers.