In 2017, Ricardo Rosselló assumed the governorship of Puerto Rico under one of the worst financial crises facing any jurisdiction in the history of the U.S. He was elected on a platform of financial responsibility, fiscal efficiency, and obtaining access to the capital markets, so that Puerto Rico could be put once again in a path of economic development and growth.
His administration knew it needed to enact public policy reforms that were in the best interest of the people of Puerto Rico while complying with the requirements set forth by Congress in the Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA.
In the past year, we have made great progress. Less than two months after Gov. Rosselló took office, the government submitted a fiscal plan to the oversight board created by PROMESA to oversee the island’s finances. A revised version was approved after just a few weeks.
Then, Hurricanes Irma and Maria slammed the island and devastated every aspect of Puerto Rican life — disrupting our power grid, our water system, our ports and airports, our roads and our communications infrastructure. Once we emerged from the wreckage, it quickly became clear that the original fiscal plan would require significant updates.
Earlier this year, the government submitted proposed revisions to reflect Puerto Rico’s new reality. The amended fiscal plan submitted last week includes structural reforms designed to attract private capital investments and to drive economic growth, including reforms to our tax code, regulatory regime, power markets and welfare benefits. We’ve streamlined our government spending, reducing expenses, eliminating duplicative processes and agencies, scaling efficiencies, and focusing on compliance initiatives. Lastly, the government instituted a chief financial officer whose job will focus on providing more transparency, ensuring fiscal responsibility, and optimizing our resource allocation in accordance with the budget and fiscal plan.
We expect these measures will result in a $6.3 billion surplus over six years — on top of the additional economic growth anticipated from structural reforms in the fiscal plan.
The government and the board have worked with stakeholders and their constituencies, and have proactively engaged creditors to provide relevant financial information and details of our fiscal plan. We voluntarily built an extensive electronic database to keep the public and financial markets informed about our cash flow, payroll, and vendor outlays. These reports allow anyone to compare our budget with Treasury forecasts and the amount of money paid to agencies and municipalities for disaster relief.
Puerto Rico’s updated fiscal plan closes the gap between reforms the government initially proposed and those demanded by the board. We amended our plan to comply with the board’s requirements to slow spending in some places and cut it in others. But we did this in a way that accounts for all projected revenue sources and protects what we believe are essential services.
The Rosselló administration will protect pensions, and it will not implement dangerous labor reforms that are not in the best interest of the Puerto Rican people. There are alternatives that both sides can accept, so we will continue to push for those.
While Puerto Rico’s relationship with the board has had its bumps, it has also been constructive and has yielded progress. That is why we are working so hard to find common ground. The 3.4 million Americans living on the island depend on a successful outcome to Puerto Rico’s negotiations with its stakeholders.
Carlos Mercader is the executive director of the Puerto Rico Federal Affairs Administration.
