Board: Puerto Rico to see 65% surplus drop amid debt crisis

SAN JUAN, Puerto Rico (AP) — A federal control board that oversees Puerto Rico’s finances prepared to vote Wednesday on a revised fiscal plan as it warned the island’s surplus could plunge by 65% and that the government is unable to pay current debt obligations.

The plan will serve as a blueprint for a U.S. territory crippled by hurricanes, earthquakes and the coronavirus pandemic as it continues to restructure a portion of its more than $70 billion public debt load.

Natalie Jaresko, the board’s executive director, told reporters during a conference call on Tuesday that the island’s economy will shrink over the next five years and that the anticipated surplus in upcoming years will drop from $23 billion to $8 billion from fiscal years 2020 to 2032. She declined to say how this drop would affect the repayment of Puerto Rico’s debt, saying only that the island cannot afford existing contractual obligations.

“The road ahead is much more uncertain,” she said, referring in part to the consequences of the pandemic, noting that the revised economic projections are similar to those issued after Hurricane Maria hit in September 2017.

Jaresko said there will be no cuts made to Puerto Rico’s government for now so it can focus on improving its operations, adding that the roughly $9.4 billion general fund will remain the same size as the current fiscal year’s. She also said Puerto Rico’s government has failed to make significant reforms, including in the labor sector, that would have increased the island’s prosperity.

The modified fiscal plan comes less than a week after Rep. Raúl Grijalva submitted amendments to a law that in part created the board as part of a financial package for Puerto Rico.

The bill in part calls for an audit of Puerto Rico’s debt...