CPI: CNE — social negotiation to exit the crisis

On December 4, 2012, CPI carried the diagnosis of Sergio Marxuach, public-policy director at the Center for a New Economy (CNE): social negotiation is indispensable to exit the crisis. Since 2000, he said, Puerto Rico’s public debt rose 9% while economic activity grew only 4%. Labor participation hovered around 39% — among the lowest in history — and a structural deficit of $1,104 million was projected for 2013.

Marxuach blamed part of the stagnation on partisan agendas and postwar (1940s) institutions that did not evolve: privileged U.S. market access, cheap labor and political stability had been matched or surpassed by other countries; hemispheric free-trade treaties ended that exclusivity. “Bringing foreign capital cannot be the heart of the economic model,” he said, warning that those who benefit from the worn-out model still block change.

The incoming government, per CNE, inherited $16 million in COFINA debt. “That debt would not necessarily have been bad if we had used it for hospitals, roads or schools, but we used it to finance operating expenses and old debts,” Marxuach explained. General Fund collections were down 3% year-to-date, putting Treasury at 2006 levels.

With low labor participation but sizable informal activity, CNE proposed drawing workers into the formal economy — not only paying Treasury, but meeting minimum wage, Social Security and health plan rules. On the retirement system: present a plan in the first 90 days of 2013; “it is not a lack of ideas, it is a lack of will.” Debt burden also weighs on arts and culture as assets. Projected deficit ≠ disbursement. Primary: CPI 2012-12-04.

Source: Centro de Periodismo Investigativo. https://periodismoinvestigativo.com/2012/12/indispensable-la-negociacion-social-para-salir-de-la-crisis-dice-el-cne/