As Puerto Rico emerges from a drawn-out bankruptcy process, a federal control board that oversees the island’s finances announced Wednesday that it will focus on growing the U.S. territory’s economy.
The board’s new executive director, former New York state budget director Robert Mujica, unveiled a new fiscal plan that will serve as the island’s economic blueprint for the near future.
It demands that Puerto Rico overhaul its education, tax and infrastructure sectors and attract more investors by strengthening its fragile power grid and making it easier to do business on an island known for its clunky bureaucracy.
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"There’s no time to waste," Mujica said at a press conference.
In recent years, the U.S. government allocated more than $120 billion to help Puerto Rico offset the impact of the pandemic and natural disasters ranging from earthquakes to major hurricanes. But Mujica noted those were "one-time infusions that temporarily boosted output" and fueled economic recovery.
The island’s real GNP is declining, and economic growth is slowing as those funds evaporate, he added.
"Those funds mask underlying, persistent weaknesses in Puerto Rico’s long term economic outlook," he said.
High inflation — plus a shrinking and aging population — also have contributed to the economic decline, the board noted.
Mujica said that to help improve the island’s economy, the board will meet with government officials, education leaders and nongovernment organizations to strengthen Puerto Rico’s education sector, which has long been lagging.
The board’s fiscal plan also seeks a comprehensive review of Puerto Rico’s tax system despite recent improvements.
"While much progress has been made, significant reform is still required because Puerto Rico’s current tax system has historically suffered from complexity, instability and inconsistency," the board said in a statement.
The focus on economic growth comes after the board oversaw a bankruptcy-like process in which Puerto Rico’s debt dropped to $34 billion from more than $70 billion, an amount the government had said in 2015 that it could not pay. Two years later, it filed for the biggest U.S. municipal bankruptcy in history.
"That took all the oxygen of the room," Mujica said, adding that the board is now targeting fiscal health and economic growth.
The board, which was created by U.S. Congress in 2016, will continue overseeing Puerto Rico’s finances until the U.S. territory approves four consecutive balanced budgets.
Mujica said it’s unclear if the first one has been approved because the government has yet to submit audited financial statements.
Puerto Rico Gov. Pedro Pierluisi said in a statement after the news conference that his administration is still analyzing the fiscal plan they received on Tuesday, adding that he supports reforms in various sectors.
"My vision is that we continue to do all the necessary work so that our government has a solid fiscal situation in the short and long term, and that the board completes its work as soon as possible," he said.
