PR Budget Report

SAN JUAN, Puer­to Rico — Gov­ern­ment offi­cials have revealed that Puer­to Rico’s over­all deficit stood at a record $39 bil­lion in the past fis­cal year, adding to gloom over the econ­o­my.   The fig­ure was made pub­lic late Mon­day in an annu­al audit­ed report that Puer­to Rico is required to sub­mit to fed­er­al offi­cials who over­see the munic­i­pal secu­ri­ties mar­ket. It’s a $5.4 bil­lion increase from the 2011 fis­cal year and comes as the U.S. ter­ri­to­ry strug­gles to emerge from a sev­en-year reces­sion. “The num­bers are trans­par­ent and demon­strate the crit­i­cal state of the government’s finances,” Jaime Perel­lo, pres­i­dent of the island’s House of Rep­re­sen­ta­tives, said Tues­day.

The rev­e­la­tion comes a week after Puer­to Rico’s Gov­ern­ment Devel­op­ment Bank announced it was reduc­ing its bond sales due to a record yield of more than 10 per­cent, spook­ing investors and rais­ing con­cerns about the island’s eco­nom­ic health.   Perel­lo and oth­ers blamed the deficit on the admin­is­tra­tion of for­mer Gov. Luis For­tuno, who gov­erned Puer­to Rico from 2009 to 2013 before los­ing to Gov. Ale­jan­dro Gar­cia Padil­la in Novem­ber.   Fortuno’s admin­is­tra­tion laid off some 30,000 pub­lic work­ers, cut salaries and raised tax­es, but Rep. Rafael Her­nan­dez, House trea­sury com­mit­tee chair­man, said those actions did not save the econ­o­my.   “There was no fis­cal dis­ci­pline and the coun­try saw the high­est debt in its his­to­ry,” he said.   Jose Tor­res, gen­er­al sec­re­tary of Fortuno’s pro-state­hood New Pro­gres­sive Par­ty, said For­tuno inher­it­ed a finan­cial cri­sis from the pre­vi­ous admin­is­tra­tion.

The over­all deficit of $39 bil­lion cov­ers all gov­ern­ment agen­cies, pub­lic cor­po­ra­tions and oth­er enti­ties, includ­ing the Uni­ver­si­ty of Puer­to Rico and the Gov­ern­ment Devel­op­ment Bank. The report also not­ed that the territory’s gen­er­al fund deficit stood at $1.3 bil­lion in the 2012 fis­cal year, a 24 per­cent increase from the pre­vi­ous year. That amount was reduced to some $700 mil­lion after the gov­ern­ment issued $952 mil­lion in bonds.   Puer­to Rico also has a $69 bil­lion pub­lic debt.   Trea­sury Sec­re­tary Mel­ba Acos­ta said the deficits are being reduced and that the government’s pri­or­i­ty is to revive the econ­o­my. She not­ed that offi­cials have revamped the island’s crum­bling pen­sion sys­tem, increased water rates and pri­va­tized man­age­ment of Puer­to Rico’s main inter­na­tion­al air­port. These and oth­er mea­sures are expect­ed to gen­er­ate some $1.4 bil­lion in new rev­enue, Acos­ta said.   “We have tak­en fast, deci­sive and unprece­dent­ed steps to meet the enor­mous chal­lenges we inher­it­ed,” she said.   Acos­ta said the 300-page com­pre­hen­sive annu­al finan­cial report was sub­mit­ted more than four months after its due date because of the finan­cial state of some pub­lic agen­cies. She said the gov­ern­ment expects to sub­mit the next report on time in May 2014.