Puerto Rico hopes to close budget deficit in two to three years
Fri, Apr 26 2013
SAN JUAN, April 26 (Reuters) - Puerto Rico would see its deficit decline substantially to $200 million under a proposed budget for the 2014 fiscal year unveiled by the territory's governor, who said he expects to close the budget gap in two to three years.
Governor Alejandro Garcia Padilla unveiled his budget plan on Thursday night.
But an official said on Friday that closing the gap would be a tough call.
"We have two years to close this deficit which is a monumental chore," Treasury Secretary Melba Acosta told reporters.
Puerto Rico has an estimated deficit of $333 million and $775 million of debt refinancing for the current fiscal year ending on June 30.
The proposed budget would also have $500 million in bond refinancing.
The new budget measures were closely watched by investors in America's $3.7 trillion municipal bond market, where Puerto Rico pays the highest yields among large issuers.
The U.S. territory's bonds have been stung in recent months by downgrades by all three leading Wall Street credit-rating agencies.
Each knocked its credit rating to near junk-bond status, pointing in part to an economy sapped by recession. Further ratings cuts are possible, and ratings agencies said they wanted Puerto Rico to make strides toward a structurally balanced budget and reform its government pension system.
Government officials say Garcia Padilla's first budget proposal since his election proposal does do that.
They said the real structural deficit of the current fiscal year budget is $2.2 billion, rather than the $1.1 billion initially acknowledged by the previous administration, and much of the increase comes from a "true accounting" of the government's obligations.
Much of the $783 million increase in the proposed 2014 budget stems from "fiscal responsibility measures," like budgeting an extra $253 million to keep the pension system afloat and working to end the practice of refinancing debt obligations to put off repayment dates.
The new budget sets aside $200 million to pay down Puerto Rico's debt and calls for refinancing $500 million of debt in 2014.
The proposed budget must be approved by the legislature, which is controlled by the governor's Popular Democratic Party. It comes as the island's Planning Board forecast that Puerto Rico's economy will shrink by 0.4 percent this calendar year and grow by 0.2 percent during the fiscal year beginning in July.
Puerto Rico will balance its budget for the current fiscal year, which ends on June 30, by issuing $333 million of new COFINA bonds and refinancing $600 million in general obligation bonds and $175 million in Public Building Authority Bonds.
The refinancing had been expected before June 30 but will not take place until after then because the government's new financial statements must be completed first, Government Development Bank spokeswoman Betsy Nazario said. The GDB has provided interim lines of credit to the government.
Puerto Rico Sells $335 Million of Privately Placed Bonds
Bloomberg Municipal debt sold in Puerto Rico is tax-exempt in all U.S. states. Javier Ferrer, president of the Government Development Bank for Puerto Rico, the island's fiscal agent, wasn't immediately available to comment on the sale, Betsy Nazario, a ... Puerto Rico hopes to close budget deficit in two to three yearsReuters all 2 news articles » |
VERONICA KHOKHLOVA
citizen media
digital activism
eastern & central europe
economics & business
english
freedom of speech
french
law
media & journalism
politics
protest
quick reads
On April 26, Reporters Without Borders (RSF) issued a statement [en; fr; uk - .pdf] on the situation at the Ukrainian TV station TVi:
Reporters Without Borders condemns the sudden change of management at the opposition TV station TVi, announced three days ago, and is disturbed to learn that ensuing internal disputes have resulted in broadcasting being suspended. [...](more…)
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JANINE MENDES-FRANCO
caribbean
citizen media
english
haiti
human rights
law
media & journalism
politics
quick reads
Haiti does not need more prisons, it needs better prisons and fewer prisoners.Haiti Chery provides some interesting statistics which support his view.
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A one week vacation to Puerto Rico, Isla Verde , Jungle tours and beach days.
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SAMEA SHANORI
afghanistan
central asia & caucasus
citizen media
english
farsi
politics
war & conflict
With about 20 months remaining before the withdrawal of NATO troops from Afghanistan, the country's police forces and military assume greater responsibility for security. There are fears, however, that the violence in the country will increase with the departure of foreign troops by the end of 2014. As a recent deadly attack in the western town of Farah shows, the Taliban remains a formidable threat.
On April 3, 2013, nine Taliban insurgents stormed a court in Farah, leaving 46 people dead and almost 100 wounded. Casualties included both civilians and members of local security forces. The attack reportedly aimed to free a group of Taliban prisoners standing trial.
The assault was the most violent and sophisticated in a series of similar incidents that have occurred across the country as Hamid Karzai, the Afghan president, continued negotiations with the Taliban. Following the attack, Karzai met with families of the victims. Addressing a crowd in Farah, he blamed unspecified “neighbors” for violence in the country:
On April 9, Afghan TV channel Tolo News aired a talk show [fa] in which Karzai's trip to Farah was discussed. During the show, Assadullah Sahadati, an MP, criticized Karzai's “soft” stance on the Taliban and his rhetoric which divided the insurgents into Afghan and non-Afghan ones. Sahadati noted that the Taliban had claimed responsibility for the attacks. He also mentioned that both Pakistani and Afghan elements within the violent movement had been waging a war on US-led forces in the country.
Karzai's attempts to forge a workable alliance with the Taliban in the face of external threats is nothing new – he has frequently spoken of his “brothers” within the movement and blamed Pakistan for many of the country's ills. However, his claims contradict statements made by the Afghan Taliban, including through their website. After the attack in Farah, the Taliban declared that they would continue targeting the country's judiciary if any of their fighters are prosecuted.
The news was also widely disseminated through social media. For example, Dylan Welch (@dylanwelch) tweeted on April 5:
Many people in the country fear that the security situation will only worsen after NATO forces pull out in 2014. As Karzai's presidential term draws to a close, Afghans are wondering whether the next president will continue holding talks with the men Karzai calls “brothers”.
On April 3, 2013, nine Taliban insurgents stormed a court in Farah, leaving 46 people dead and almost 100 wounded. Casualties included both civilians and members of local security forces. The attack reportedly aimed to free a group of Taliban prisoners standing trial.
The assault was the most violent and sophisticated in a series of similar incidents that have occurred across the country as Hamid Karzai, the Afghan president, continued negotiations with the Taliban. Following the attack, Karzai met with families of the victims. Addressing a crowd in Farah, he blamed unspecified “neighbors” for violence in the country:
All the miseries that Afghans face today are due to the interference of neighbours near and far. Afghans could reconcile with Afghan Taliban, but we struggle against those who are foreigners and who [help the Taliban from outside].‘Brothers’
Screenshot of TV Tolo News Facebook page with a discussion about Hamid Karzai's trip to Farah.
Karzai's attempts to forge a workable alliance with the Taliban in the face of external threats is nothing new – he has frequently spoken of his “brothers” within the movement and blamed Pakistan for many of the country's ills. However, his claims contradict statements made by the Afghan Taliban, including through their website. After the attack in Farah, the Taliban declared that they would continue targeting the country's judiciary if any of their fighters are prosecuted.
The news was also widely disseminated through social media. For example, Dylan Welch (@dylanwelch) tweeted on April 5:
@dylanwelch: #Taliban spox says Farah killings will be repeated, they will continue to target gov judges and lawyers. #Afghanistan shahamat-english.com/index.php/paig…During the Tolo News talk show, MP Sahadati said [fa]:
The representative of the Afghan Taliban has always openly claimed responsibility for such terrorist activities. When they admit responsibility for such incidents and Karzai [says they should not be blamed], we get confused as to whether to trust what Taliban say or what the Afghan government says.After the Tolo News posted the video of the talk show on their Facebook page, an Afghan user of the social media service, Farhad Adg Dost, asked on April 8:
Did [Hamid Karzai] also release the other suicide attackers (his brothers) from Farah's prisons???
Another Facebook user commented [fa] on the public page of the Afghan president:
ریاست جمهوری اشتباه کرده اگر ریاست جمهوری به فکر مردم بیچاره افغانستان بود برادران کرزی را که هر روز جنایت می افریند رها نمی
کرد این مرد دغل باز بخاطر بربادی ملت کمر بسته
The presidential administration has made a mistake. If they really cared about the innocent Afghan people, they would never release Karzai's ‘brothers', who commit crimes everyday. This dishonest person [Karzai] has taken every possible effort to ruin the nation.When news agency Khama Press posted on its Facebook page a report about Karzai's visit to Farah on April 8, the report drew many harsh comments. Szamen Hemmat wrote [fa], for example:
به نظرم میره برای مردم فراه میگه او مردم گناه شما نیست گناه من است من دعوت کرده بودم که خوده کاندید ریاست جمهوری کند ولی متاسفانه نفهمیدم که اونا قسم خورده این خاک است و طریقه کمپاین اونا همین قسم است…ومتاسفانه کمپاین را از ولایت شما شروع کرد… اما دگه چه باید گفت؟؟؟ خواهد گفت می بخشیند از اینکه زیادتر از ده سال شده شما مردم ملکی وبی گناه را همرا برادرهای ناراضی ام هرروز، هرساعت، هردقیقه، هر ثانیه وهر لحظه -لحظه زندگی بخاک وخون میکشم و اشتباه سیاست من وغرب است… ؟؟؟
Maybe Karzai will tell the people of Farah that [the attack] was his fault since he always calls upon Taliban to negotiate and participate in political life of the country, ignoring the fact that their methods have always been inhuman? What else can he say to the people??? Will he ask the people to forgive him for the fact that during a decade of his presidency, he and his ‘brothers’ killed many civilians and innocent Afghans? Will he admit that it is because of the policies he and the West had followed?During the decade-long conflict between the insurgents and the Afghan government, thousands of civilians have been killed and maimed. The Taliban, however, does not see the killed people as civilians. Ahmad Shuja (@AhmadShuja) tweeted on April 14:
Taliban vow to avoid civilian casualties during soon-to-start spring offensive. But their definition of ‘civilian’ is contrary to [international] law.He added:
Roughly, anyone who isn't affiliated with the [government] or ISAF [International Security Assistance Force], i.e., judges, civil servants, etc. are not civilians as per Taliban.The Taliban often attack individuals supporting or working with the Afghan government or international organizations. On April 8, the UN Assistance Mission in Afghanistan (UNAMA) said there had been a rise of civilian deaths in the country since the beginning of 2013. According to UNAMA, more than 200 civilians have been killed or injured in the provinces of Farah, Wardak, and Kunar over the last five months.
Many people in the country fear that the security situation will only worsen after NATO forces pull out in 2014. As Karzai's presidential term draws to a close, Afghans are wondering whether the next president will continue holding talks with the men Karzai calls “brothers”.
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UN PLAN INTEGRAL CONTRA LAS DROGAS
El proyecto presentado por el senador Miguel Pereira para despenalizar el consumo de la marihuana como medida para combatir la actividad criminal relacionada con ésta, es una nota extemporánea y discordante y una distracción innecesaria en la discusión más amplia que tiene que abordar el país sobre el narcotráfico y la drogadicción.
Antídotos contra el desaliento
COQUI SANTALIZ
CON ACENTO PROPIO Hay cosas que duelen más que otras. Es subjetivamente selectivo. Para nosotros, que arranquen una montaña irreversiblemente, por los siglos que tomó ergui
El Caño, proyecto de país
JUAN LARA
Después de muchos estudios, intensa planificación y cientos de horas de actividad de las organizaciones comunitarias y los residentes del área, ha llegado el momento de iniciar el
Concertación y desconcierto
CARMEN DOLORES HERNÁNDEZ
La idea se puso en práctica en 1988 en Chile para vencer electoralmente a la extrema derecha; también en México en los noventa, para superar una crisis económica. La concertación
Esfuerzo
Welmo Romero
¿Porqué es tan difícil entender el concepto de dignidad como condición de igualdad inherente a la especie humana? Tenemos que estar claros en que donde opera la dignidad no puede
Escuela Pedro Albizu Campos de Levittown, de Toa Baja, celebrará su 30 aniversario el sábado 30 de noviembre, de 7:00 p.m. a 12:00 a.m., en la Casa Capitular del Maestro, en Bayamón. (787) 479-6110
Clase 1963 Escuela Superior Julio Vizcarrondo Coronado, de Carolina, celebrará su 50 aniversario el sábado 1 de junio. (787) 752-6511; (787) 390-2713; (787) 257-0863; (787) 557-0167; (787) 403-3571
Central High, de Santurce, celebrará su 60 aniversario el 19 de mayo. (787) 787-3252; (787) 769-5973
¿Sabe quién es el verdadero culpable del desempleo en Puerto Rico? Aunque no lo crea, el verdadero culpable es nuestra preferencia por los productos extranjeros.
Cada vez que nosotros compramos productos hechos en Puerto Rico estamos logrando que nuestros hermanos puertorriqueños continúen trabajando y produciendo más cada día y hasta que puedan exportarlos. Con esto logramos dos propósitos: que el dinero se quede en Puerto Rico para ampliar las facilidades de producción y traer dinero del extranjero que es vital para solidificar nuestra economía.
Cuando patrocinamos las empresas locales se logra ampliar la producción y a la larga se lograrían unos precios muy razonables en todo lo que compramos. Más empresas se estarían abriendo para aprovechar que patrocinamos lo nuestro.
Cada vez que compramos productos extranjeros se benefician las empresas extranjeras y los empleos se crean en ellas y a esto lo acompaña un aumento en nuestro nivel de desempleo.
Si quieres conservar y aumentar el empleo local patrocina los productos hechos en Puerto Rico.
Sixto Morales
Durante el año pasado la compañía Metropistas, la cual se ganó el contrato para la PR-22 y PR-5, estuvo arreglando los sistemas de iluminación de dichas autopistas por varios meses. Tras reparar los postes de luz en las autopistas y en las salidas, estos estuvieron en funcionamiento por varias semanas. El cambio era radical, sobre todo en estas salidas ya que eran oscuras y peligrosas.
Desde diciembre del año pasado estos postes dejaron de funcionar. Me gustaría saber qué paso ya que estaban alumbrando perfectamente. Se supone que Metropistas se encargue del mantenimiento de las autopistas, pero en cuanto al alumbrado eléctrico no han hecho nada al respecto.
Le pedimos a la gerencia de Metropistas que evalúe estos alumbrados ya que serán de beneficio para todos.
José MedinaSan Juan
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JEFF FARROW
featured
history
Congressional researchers plan to travel to Puerto Rico next month to gather information for a study intended to make it more difficult for the territory to obtain statehood.
A Puerto Rico plebiscite last November petitioned the Federal government to begin a transition of the islands to statehood. Earlier this month, President Obama sent legislation to Congress for another vote in the territory to confirm the political status aspirations of Puerto Ricans.
The purported purpose of the study is to estimate the Federal budgetary impacts of Puerto Rico statehood — but the report may well provide a misleading picture of a net cost.
The goal of the study request is to discourage Congress from granting statehood at a time when the Federal government is wrestling over how to get an excessive budget deficit under control.
The request was made by the chairmen of the lead U.S. House of Representatives committee and subcommittee on territories issues: Natural Resources Committee Chairman Doc Hastings (R-WA) and Fisheries, Wildlife, Oceans and Insular Affairs Subcommittee Chairman John Fleming (R-LA). In 2010, Hastings said that statehood for Puerto Rico “would come with significant costs.” He also released his own calculation of the cost of treating Puerto Rico equally with the States in 10 Federal programs. The estimate ranged between $4.5 billion and $7.3 billion a year. (See chart below.)
The Government Accountability Office (GAO), a respected, non-political investigative arm of Congress, is conducting the study. GAO does reports at the request of leaders of congressional panels — but it is limited to researching what it has been asked to do.
In this case, the Hastings’ initiated inquiry was originally only to calculate the budgetary costs of equal treatment of Puerto Rico in selected Federal programs, similar to Hastings’ 2010 calculation. After it was pointed out that such a report would be misleading, however, GAO obtained approval to also estimate increases in Federal revenue from statehood.
But the eventual report is still likely to be misleading on a net budgetary cost.
• Because Puerto Rico is treated very unequally in some major programs and in most tax laws, it has always been recognized that there would need to be a multi-year transition for the territory to become a State. This would enable economic changes in the islands and impacts on the Federal and territorial budgets to be more easily accommodated through phase-ins of equal treatment. It has not been planned for the GAO report, however, to illustrate a real-world progression of budget costs and benefits. Instead, the study is to provide a static, one-year estimate that will suggest a much more immediate, substantial budget impact.
• GAO is not factoring the cost to the Federal and State governments of the massive relocation of Puerto Ricans to the States because of greater Federal and State program benefits and other greater economic opportunities in the States than in the territory. The States are now home to some 1.6 million citizens born in Puerto Rico and approximately 4.6 million people of Puerto Rican heritage.
• The study is not examining how statehood could be implemented on a budget-neutral basis. In 1989-90, U.S. Senate committees approved a bill that would have implemented statehood for Puerto Rico with no cost to the Federal government by adjusting program and tax laws and providing for a transition.
• GAO is not using current program and tax data because it is difficult to obtain. The older numbers being used would overstate costs and understate revenues because of reductions in Federal spending and increased taxation that began to take effect this year.
Critically, GAO has also been having a hard time in obtaining information necessary to calculate increased revenue from equal taxation, particularly the income of manufacturing operations in the territory owned by companies in the States but headquartered in foreign tax havens. Most of the manufacturing in the islands is done by such companies — and manufacturing accounts for 42-48% of Puerto Rico’s Gross Domestic Product.
The study, additionally, needs more information to project changes in Puerto Rico’s economy that would result from statehood. Statehood resulted in transformative investments in the economy of Hawaii, the last State to enter the Union and, like Puerto Rico, islands separated from the rest of the country by many miles of ocean.
Hastings initiated the study request last year anticipating that statehood would win Puerto Rico’s plebiscite.
He plans a Committee hearing this year on the plebiscite. It is likely that he would use the GAO report in the hearing.
In addition to cost, Hastings has questioned whether a State of Puerto Rico should have Spanish as well as English as an official language — as the territory of Puerto Rico does now and similar to Hawaii’s Hawaiian and English official languages.
Despite Hastings’ opposition, however, the House of Representatives overwhelmingly approved legislation in 2010 including statehood as an option for Puerto Rico.
A Puerto Rico plebiscite last November petitioned the Federal government to begin a transition of the islands to statehood. Earlier this month, President Obama sent legislation to Congress for another vote in the territory to confirm the political status aspirations of Puerto Ricans.
The purported purpose of the study is to estimate the Federal budgetary impacts of Puerto Rico statehood — but the report may well provide a misleading picture of a net cost.
The goal of the study request is to discourage Congress from granting statehood at a time when the Federal government is wrestling over how to get an excessive budget deficit under control.
The request was made by the chairmen of the lead U.S. House of Representatives committee and subcommittee on territories issues: Natural Resources Committee Chairman Doc Hastings (R-WA) and Fisheries, Wildlife, Oceans and Insular Affairs Subcommittee Chairman John Fleming (R-LA). In 2010, Hastings said that statehood for Puerto Rico “would come with significant costs.” He also released his own calculation of the cost of treating Puerto Rico equally with the States in 10 Federal programs. The estimate ranged between $4.5 billion and $7.3 billion a year. (See chart below.)
The Government Accountability Office (GAO), a respected, non-political investigative arm of Congress, is conducting the study. GAO does reports at the request of leaders of congressional panels — but it is limited to researching what it has been asked to do.
In this case, the Hastings’ initiated inquiry was originally only to calculate the budgetary costs of equal treatment of Puerto Rico in selected Federal programs, similar to Hastings’ 2010 calculation. After it was pointed out that such a report would be misleading, however, GAO obtained approval to also estimate increases in Federal revenue from statehood.
But the eventual report is still likely to be misleading on a net budgetary cost.
• Because Puerto Rico is treated very unequally in some major programs and in most tax laws, it has always been recognized that there would need to be a multi-year transition for the territory to become a State. This would enable economic changes in the islands and impacts on the Federal and territorial budgets to be more easily accommodated through phase-ins of equal treatment. It has not been planned for the GAO report, however, to illustrate a real-world progression of budget costs and benefits. Instead, the study is to provide a static, one-year estimate that will suggest a much more immediate, substantial budget impact.
• GAO is not factoring the cost to the Federal and State governments of the massive relocation of Puerto Ricans to the States because of greater Federal and State program benefits and other greater economic opportunities in the States than in the territory. The States are now home to some 1.6 million citizens born in Puerto Rico and approximately 4.6 million people of Puerto Rican heritage.
• The study is not examining how statehood could be implemented on a budget-neutral basis. In 1989-90, U.S. Senate committees approved a bill that would have implemented statehood for Puerto Rico with no cost to the Federal government by adjusting program and tax laws and providing for a transition.
• GAO is not using current program and tax data because it is difficult to obtain. The older numbers being used would overstate costs and understate revenues because of reductions in Federal spending and increased taxation that began to take effect this year.
Critically, GAO has also been having a hard time in obtaining information necessary to calculate increased revenue from equal taxation, particularly the income of manufacturing operations in the territory owned by companies in the States but headquartered in foreign tax havens. Most of the manufacturing in the islands is done by such companies — and manufacturing accounts for 42-48% of Puerto Rico’s Gross Domestic Product.
The study, additionally, needs more information to project changes in Puerto Rico’s economy that would result from statehood. Statehood resulted in transformative investments in the economy of Hawaii, the last State to enter the Union and, like Puerto Rico, islands separated from the rest of the country by many miles of ocean.
Hastings initiated the study request last year anticipating that statehood would win Puerto Rico’s plebiscite.
He plans a Committee hearing this year on the plebiscite. It is likely that he would use the GAO report in the hearing.
In addition to cost, Hastings has questioned whether a State of Puerto Rico should have Spanish as well as English as an official language — as the territory of Puerto Rico does now and similar to Hawaii’s Hawaiian and English official languages.
Despite Hastings’ opposition, however, the House of Representatives overwhelmingly approved legislation in 2010 including statehood as an option for Puerto Rico.
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