Country Report Puerto Rico
- ID: 2138738
- September 2015
- Region: Puerto Rico
- 17 Pages
- The Economist Intelligence Unit
Two weeks after unveiling its Five-Year Fiscal Adjustment Plan, the administration is seeking support for the initiative from mostly hostile audiences at home and abroad.
The plan, which proposes harsh austerity measures, labour-market reform, debt rescheduling and the creation of a fiscal oversight board, provoked mostly negative reactions on the island and among creditors on the US mainland. Several legislators in the ruling Partido Popular Democrático (PPD) have already declared that they will oppose many of the plan's measures when it is finally submitted to the legislature, possibly by mid-October. Carmen Yulín Cruz (PPD), the influential mayor of the capital, San Juan, has promised to fight any initiatives having "a negative effect on the people."
In mid-September the governor, Alejandro García Padilla, flew to Washington DC for meetings with leaders of the US Congress and officials of the executive branch, while Melba Acosta, the president of the Government Development Bank (GDB) and effectively the chief policymaker, travelled to New York for meetings with creditors. The message is that without debt rescheduling, the island's Treasury is doomed to run out of cash before year-end, triggering either a government shutdown or default. Thus far, the message has failed to bring creditors to the negotiating table to work on an orderly rescheduling. Instead, several groups, including the influential 60 Plus Association (the US's largest centre-right seniors organisation, representing more than 7.2m older Americans), have started a media and lobbying campaign in New York City and Washington DC, accusing the government of exaggerating its liquidity crisis to skirt its obligations to bondholders.