The executive director of a federal control board overseeing Puerto Rico’s finances said Monday that the island is likely to receive $20 billion more than initially estimated in federal relief as it rebuilds from Hurricane Maria.
Overall, Puerto Rico is slated to receive $82 billion, Natalie Jaresko said. She said the funds will help the struggling economy rebound but warned that gains will be short-lived unless there are tax and labor reforms.
“It continues to be absolutely critical,” she said of the reforms, which she did not specify. “We may have lost a window of opportunity.”
Jaresko met with reporters to outline a new fiscal plan for the U.S. territory, which has been in a recession for 12 years and is trying to restructure part of its more than $70 billion in public debt.
New plan expected to get OK
The board is scheduled to approve the new plan Tuesday, although it’s unclear whether the island’s government supports it.
Christian Sobrino, the government’s representative on the board, said officials are reviewing a draft of the plan and will announce their position during Tuesday’s public hearing. Government officials have previously rejected portions of the original plan.
“This administration has faced a fiscal crisis and two hurricanes without precedent,” Sobrino said. “The actions our government has taken reflect an abundance of will to do what is necessary to transform Puerto Rico. Labeling policy differences as a lack of political will is not prudent.”
The revised five-year fiscal plan, which serves as an economic blueprint for the island, anticipates a 6 percent increase in revenues and a 7 percent decrease in expenditures for this fiscal year.
Jaresko said Puerto Rico also could see a $17 billion surplus if it reaches a settlement with those who bought sales tax bonds issued by the local government. The agreement with creditors finalized last week represents nearly 24 percent of the island’s debt, and officials expect the deal to be presented next month to a judge overseeing a bankruptcy-like process for Puerto Rico agencies.
The fiscal plan does not contain any overhauls to Puerto Rico’s tax and labor systems, which Jaresko said are needed to help the economy rebound. She said the government has to improve the ease of doing business on the island as well as create a more competitive labor market and transition employees from the informal economy to the formal one.
Puerto Rico legislators are still debating a tax reform bill that the board has said does not meet the need for a broader, more progressive tax regime. Jaresko also warned the island would face long term deficits if the local government does not make the economy more competitive.
“To change long term, more hard work remains,” she said.