Board certifies Puerto Rico’s 2019 Fiscal Plan

On May 9, 2019, the Financial Oversight and Management Board (FOMB) certified the 2019 Fiscal Plan for Puerto Rico (“Restoring Growth and Prosperity”). The 153-page document is not a Title III plan of adjustment: it does not classify claims or discharge debts. It is the operative fiscal framework under PROMESA to balance finances in five years and regain access to capital markets.

The plan starts from a hard diagnosis: by April 2018 the economy was $16 billion smaller in real terms and the population almost half a million smaller than in 2005; consolidated debt and pensions exceeded $120 billion (more than $70 billion in financial debt and more than $50 billion in pension liabilities). Before María, the plan estimates annual structural deficits exceeding $7 billion (or $3 billion before contractual debt service). María added tens of billions in damage and a real GNP drop of 4.7% in FY2018, along with a massive flow of federal recovery funds.

As structural reforms, the plan projects growth impact via human capital and welfare (formal labor participation; ~0.15% toward FY2025), Ease of Doing Business reform (~0.40% toward FY2023) and electric-sector reform (cheaper, more reliable power, independent regulator; ~0.30% toward FY2023). Among fiscal measures: create the Office of the CFO (controls and accountability), Hacienda and revenue reforms, reduced allocations to municipalities and the University of Puerto Rico, and pension reform toward a more sustainable system.

The plan also lists targeted investments — for example ~$122 million annually FY2019–FY2021 for Police wage arrears; $42 million additional tied to security; more than $15 million for health centers (including $25 million for the Cancer Center); and $1.4 billion additional Medicaid in FY2020–FY2024. Certifying a fiscal plan does not disburse funds or liquidate debt: it obliges the Government to align budget and execution with those projections.

Primary: the certified May 9, 2019 PDF (Title III exhibit; RECAP copy).