Tag Archives: Puerto Rico

Puerto Rico Lurches Toward Default with No Solution in Sight

This must have been what Robinson Crusoe felt like.

Tossed upon an unknown shore in a storm, waking up to find an empty ship stuck on a reef in the Caribbean and then scrambling to salvage every little resource. Rebuilding your existence is easier when you’re not starting from nothing.

The Puerto Rican government stands amid a similar perfect storm. Monday, May 2 was the due date for the island to choose between either paying off or defaulting on debt it owed to creditors, but the territory’s Government Development Bank couldn’t make it happen.

Now, it’s going to be difficult for other territorial agencies to borrow in the short term — from the sewer agency that needs money for repairing leaky pipes to the highway agency borrowing for unexpected road work.

The May deadline for Congressional action to relieve the territory has come and gone with barely an acknowledging gesture. The population continues to fall as the productive members of society trade San Juan for New York, Miami and Washington. Nothing suggests the territory’s flagging economy will recover any time soon.

And so we creep closer to oblivion, day by day. New deals with creditors emerge and falter at an increasing pace. Officials tinkers with “essential” programs they deem deserving of the island’s remaining money, while everything else is considered a possible sacrifice.

In Puerto Rico, nobody is innocent from blame for the collapse, but you can’t point a finger at a single individual. From the outside looking in, the hope is the island’s problems might be quarantined.

Read the full article at the PanAm Post

Who Will Take the Helm of Puerto Rico’s Sinking Ship?

All things must come to an end. Thankfully, that includes Puerto Rican Governor Alejandro García Padilla’s disastrous term in office.

In a press conference on Monday, García announced he would not run for a second term as governor, representing the Popular Democratic Party (PPD). He plans to spend the rest of his term working toward a solution to the ongoing fiscal, economic, and political crises that the territory faces.

This was a widely expected move. The governor’s support has faltered as the island’s troubles have worsened. In late November, Reuters reported that PPD mayors have increasingly abandoned the governor. Realistically, any governor facing a crisis of this magnitude, and not spectacularly succeeding at fixing the problems, would face pressure for a change. García is no different.

 

Read the rest on the PanAm Post here.

Hey Puerto Rico: You Need Money for a Sovereign Wealth Fund

Late last week, Reuters reported that Puerto Rico’s economic development minister, Alberto Bacó, is seeking to create a new “sovereign fund” to pay for incentives for companies to invest in the island. He claims that the fund would be created out of “concessions from creditors,” and would be used to spur development and job growth on the island.

Sovereign wealth funds are a well-explored and understood tool in public finance. Put simply, they act like an endowment fund for the nation, to prevent politicians from spending revenues from natural resources on current citizens, preserving the value of the nation’s assets for future generations.

The world’s greatest sovereign wealth fund is Norway’s Government Pension Fund, which economists point to as the model for all sovereign wealth funds. Norwegian officials created the fund to preserve the value of the country’s vast North Sea oil reserves in perpetuity, and it now holds nearly US$900 billion in assets, for a country of 5 million people. Closer to home, North Dakota and Texas are both states that have sovereign wealth funds within the United States.

Read the rest on the PanAm Post here.