by Julio Saenz • August 29, 2013 • 9:25 am
This week’s issue of Barron’s financial newspaper has Puerto Rico as its cover story. The in-depth story compares Puerto Rico’s precarious financial situation to Detroit’s recent bankruptcy and warns it could be 10 times worse if the island’s government does the same.
Some of the key numbers reported in the article are that only California and New York State have more total debt than Puerto Rico. Obviously those states are much larger so Puerto Rico’s average debt per resident “of $14,000 is 10 times the average of the 50 states.” It adds up to $70 billion in debt and that is not including $30 billion in unfunded pension liabilities. The prospects for getting out from under the debt are bleak, the island’s economy has been stuck in a recession since 2006 and unemployment is over 13%.
The good news that there are major differences between Puerto Rico and Detroit. As the author Andrew Bary explains:
“Puerto Rico has taken painful and politically unpopular steps to cut bloated government payrolls, raise taxes, and shore up its badly underfunded pension system. A new government elected in 2012, led by the populist Governor Alejandro García Padilla, is committed to putting Puerto Rico and its various bond-issuing authorities on a stronger financial footing. “
Those cuts, that have led to the strikes by government employees and students at the University of Puerto Rico that we have read about here on the mainland. Those cuts don’t seem so bad when put against the backdrop of the crisis in Detroit.
Here is a link to the whole article http://online.barrons.com/article/barrons_cover.html#text.print.
There is also a good summary and analysis here by the business journal in Puerto Rico, Caribbean Business: http://www.caribbeanbusinesspr.com/news/barrons-takes-hard-look-at-pr-finances-88092.html
Julio Sáenz was born in Rochester and grew up on Roth Street on the city’s Northeast side. He was editor and publisher of OC Excélsior, the nation’s 24th largest Hispanic newspaper based in Orange County, Calif.
Sáenz is the founder of ConXion, a publication started in 2003 to serve the Hispanic community of Rochester. Julio was named to the prestigious “20 under 40” list of the nation’s outstanding newspaper industry leaders by Presstime Magazine in 2006. He is active in several professional and community service organizations, including the National Association of Hispanic Journalists.