Crise fiscale — le déficit peut atteindre $2 billion

On February 24, 2005, Caribbean Business (Elisabeth Roman and Carlos Márquez) warned that the Commonwealth’s structural deficit could reach a record near $2 billion, after reporting a $1 billion deficit on January 20 and then seeing OGP/GDB admit nearly $1.4 billion. Sources close to government put the “structural deficit” at ~$2 billion — with potential impact on bond ratings, services, agencies, CIP and nearly all spending except payroll and debt service.

Juan Carlos Méndez (Treasury secretary-designate) called the situation “difficult and complicated”; Ileana Fas Pacheco (OGP) flagged serious problems in Education and Police, with effects on Corrections, Family and Health. S&P and Moody’s had already moved the GO and GDB outlook from stable to negative. Lockwood (GDB) insisted the deficit moves with collections and spending control, and that measures cannot be provisional.

OGP proposed confidence cuts (10%), controls on cell phones/travel/vehicles and a hiring freeze — small savings against the crisis — and removing fiscal autonomy from agencies in deficit. An early-retirement “window” was not seen as a solution: central-government payroll rose $500 million between 2002 and 2004 (from $3.8 billion to $4.3 billion). The Manufacturers Association put government at ~48% of gross product (optimal cited 17–30% of GDP); in four years the private sector lost >51,000 jobs and the public sector gained >42,000.

Of the $8.85 billion General Fund, 41¢ of every dollar was already committed (UPR, Judiciary, Legislature, AAA subsidies, pensions, debt, health reform). Public debt as of Sept. 2004: ~$38 billion (corporations $17.26 billion; municipalities $1.98 billion); in 2001 it was $23.8 billion. Pensions: actuarial obligation $11.8 billion vs assets $1.95 billion (June 2003); cash deficit >$50 million/year. GDB FY2005 deficit estimate: $1,357.5 million (GDB loan $550 million + others). Estimate / negative outlook ≠ executed downgrade or default. Cousin: none.

Source: Caribbean Business. https://puertoricoherald.com/issues2/2005/vol09n08/CBFiscalCrisis.html