Puerto Rico Oil and Gas Markets Outlook to 2025 - Supply, Demand, Investment Opportunities, Infrastructure (Fields, Blocks, Pipelines, LNG, Refinery, Storage Assets) and Competition
- Language: English
- Published: November 2013
- Region: Puerto Rico
Three weeks after the Puerto Rico's governor, Alejandro García Padilla, announced that his government would seek to renegotiate the island's US$72bn public debt, a study commissioned by a group of bondholders warned of "high costs" in the event of default and proposed measures to enable repayment of the central government's general obligation bonds (GOs). The study, prepared by three former IMF economists, is an indication that some holders of Puerto Rico GOs may be preparing to challenge the island's government in court rather than accept a rescheduling or a writedown ("haircut") on the value of their loans.
According to the three authors of the study, Puerto Rico can fix its central government deficit by increasing tax collections and lowering expenditures. To that end, they recommend measures already included in an earlier report prepared for the government by a team of economists headed by Anne Krueger, a former senior official at the World Bank and the IMF. The so-called Krueger report indicates that the government has the ability to generate a surplus in the next three years by raising sales and property taxes and cutting expenses in public schools and the state university as well as healthcare benefits for low-income citizens.
In addition to tax and spending measures, the bondholders' study also recommends structural reforms to labour laws and welfare assistance, and the reorganisation of the state-owned electric power monopoly, PREPA, to reduce energy costs. Also recommended is greater reliance on public-private partnerships to promote investment, and better exploitation of potential advantages in tourism and agriculture, all with a view to improving the economy's growth performance. A protracted recession that has lasted more than nine years thus far is at the root of the island's debt troubles. SHOW LESS READ MORE >
Country Report Puerto Rico
Bondholders propose austerity to avoid default
Battle lines are drawn