El Nuevo Dia published a headline saying “Puerto Rico bankrupt” pointing to the dire situation of the island government’s finances. (Shutterstock)
Less than a week after Puerto Rico’s House of Representatives approved a bill to request a bond issue for $225 million, the island’s main newspaper is reporting that Puerto Ricans have been misled about the government debt, with a dramatic headline reading “Puerto Rico is bankrupt” (Puerto Rico esta en quiebra).
Puetro Rican daily “El Nuevo Dia” reports that the island’s debt is close to $168 billion. The government has been telling the public that the debt was $72 billion. The latest figure includes accumulated interest, retirement funds, and medicaid costs.
Ali Rosario Alicea from Ponce is not surprised: “This is debt that has been accumulating throughout the years.”
Puerto Rico has been suffering money troubles for more than a decade. The government keeps borrowing money it can’t pay back; just think of it as trying to pay back a high interest credit card. It’s an endless debt cycle that has affected many Puerto Ricans’ pensions.
Pensions and population drops in Puerto Rico
“I lost $500 from my retirement p last year,” says Alicea, a retired school director.
The cycle is also sending many people packing to the U.S. mainland — an exodus that’s been happening for years. The most recent census shows that Puerto Rico’s population is dropping. From April 2010 to July 2014, Puerto Rico has lost 177,392 people. If this trend continues through 2015, the island’s population will be less than 3.45 million.
The Puerto Rican government’s due date for this expensive credit card is coming up. Officials need to cough up $627 million by the end of the year to start paying back loans; however, El Nuevo Dia is reporting that government officials don’t know where this money will come from. Last week, the House approved the new bond that will pay for community programs, adding more debt to the mix.
“They keep borrowing money they can’t pay back,” says Alicea, “You cannot run a country on borrowed money. This is why Puerto Rico needs to be a state.”
Last year, U.S Sen. Martin Heinrich (D-N.M) filed the Puerto Rico Status Resolution Act into the U.S. House of Representatives; a step toward possible statehood.
For more information on the debt crisis in Puerto Rico, following El Nuevo Dia’s hashtag, #quiebraPR
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VOXXI |
Puetro Rican daily calls out the government; says island is 'bankrupt'
VOXXI Less than a week after Puerto Rico's House of Representatives approved a bill to request a bond issue for $225 million, the island's main newspaper is reporting that Puerto Ricans have been misled about the government debt, with a dramatic headline ... and more » |
Puerto Rico Aims to Become 51st US State in 2021
Latin American Herald Tribune In 2020 Puerto Rico would be responsible for organizing everything so that in the elections of that year there can be voting for federal offices such as president and vice president (something that is not available to Puerto Ricans at present), two ... and more » |
Latin American Herald Tribune |
Puerto Rico Aims to Become 51st US State in 2021
Latin American Herald Tribune In 2020 Puerto Rico would be responsible for organizing everything so that in the elections of that year there can be voting for federal offices such as president and vice president (something that is not available to Puerto Ricans at present), two ... and more » |
Orlando Sentinel |
Nation's dirty little secret -- Puerto Rico -- longs for its star
Orlando Sentinel The White House released the following statement a month after the vote: "The results were clear; the people of Puerto Rico want the issue of status resolved, and a majority chosestatehood in the second question," then-White House spokesman Luis ... |
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Washington, DC—Resident Commissioner Pedro Pierluisi today introduced the Puerto Rico Statehood Admission Process Act, a bipartisan bill that would result in Puerto Rico becoming a state on January 1, 2021 once a majority of the electorate in Puerto Rico votes in favor of admission in a federally-sponsored vote. The bill is a response to a November 2012 referendum in Puerto Rico, sponsored by the local government, in which voters soundly rejected territory status and expressed a clear preference for statehood.
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Puerto Rico News Digest For February 10, 2015by noreply@blogger.com (Admin)
FARMERS WORRIED OVER IVA TAX
From The San Juan Daily Star:
Puerto Rico Farmers Association President Héctor Cordero lashed
out against the proposed valued-added tax (IVA by its Spanish
acronym) late last week, saying it poses a threat to the local
agronomy sector if it is approved without exempting agricultural
products. Cordero said the way the IVA is being proposed for
implementation, without exempting farm products, “would be a
mortal blow to the island’s farming sector.”
“The government is promoting a sustainable agriculture platform,
but imposing taxes on agricultural products would increase costs,
making it more diffi cult to farm,” Cordero said, adding that 89
percent of the food consumed in Puerto Rico is imported. Currently
and during the past 20 years, the farming sector has been exempted
from paying taxes on agricultural purchases, as disposed by Law 225
of 1995.
JUDGE THREATENS RESTRUCTURING PLAN
From The New York Times:
Critical elements of Puerto Rico’s plan to avert financial disaster
are in jeopardy, after a federal judge struck down a law that
allowed the government to restructure certain debts. The law, known
as the Recovery Act, was meant to give Puerto Rico’s public corpo-
rations protections similar to bankruptcy. Unlike American cities
like Detroit, which used federal bankruptcy law to sort out its
finances, Puerto Rico, a United States commonwealth, is not
permitted to declare bankruptcy.
In his decision on Friday night, Judge Francisco A. Besosa of the
United States District Court in San Juan, Puerto Rico, said the
Recovery Act overstepped federal law, and he enjoined common-
wealth officials from enforcing it. The government said on Monday
that it planned to appeal the judge’s ruling.
RADIO SHACK CLOSING 44 STORES IN PR
From Voxxi:
A week after Puerto Rico is declared bankrupt by its biggest daily
newspaper, electronics giant Radio Shack announced it will be closing
44 stores across the island. Calls to Radio Shack’s Puerto Rico
central office about how many jobs will be lost were unanswered and
store employees are not authorized to comment.
Five Radio Shack locations will remain open on the island, according
to “El Nuevo Dia.” This is all part of a deal made last week with
investment firm Standard General. The firm is buying out between
1,500 and 2,400 of Radio Shack’s 4,000 doors. Up to 1,750 of those
stores will house a Sprint Wireless shop in-house, a deal also announced
last week.
PR TECH SECTOR RANKS POORLY
From News Is My Business:
Puerto Rico’s technology sector offers the lowest average pays nation-
wide and is lagging when it comes to job opportunities, according to
this year’s Computing Technology Industry Association’s “Cyberstates:
State-by-State analysis of the U.S. Tech Industry” report, to be made
public later today.
The 16th annual edition of the study, which examines the size and
scope of the tech industry in terms of jobs, wages, and other factors
across the 50 states, the District of Columbia and Puerto Rico, shows
that the island placed 52nd regarding wages and 40th in terms of
employment.
Read the whole story
· · · · ·
2.5M Tremor Registered 7 Miles North of Ponceby noreply@blogger.com (Admin)
The US Geological Survey registered a 2.5 magnitude earthquake last
night at approximately 10:45PM local time, about 7 miles north of the
city of Ponce. The epicenter's coordinates were 18.123°N 66.613°W,
with a depth of 18.0 km. No damages or injuries have been reported.
PR Spoils The Rich As Middle Class Fleesby noreply@blogger.com (Admin)
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| Photo: The Real Deal Guide To Puerto Rico |
From The Associated Press:
PALMAS DEL MAR, Puerto Rico (AP) — Bond trader Ben Eiler
swapped life in suburban Georgia for an island in the Caribbean, and
he didn't even have to apply for a visa.
The towering 38-year-old native of Arkansas is one of at least 250
people who've accepted Puerto Rico's invitation to well-heeled U.S.
citizens to move to the island and enjoy life without taxes on capital
gains, an enticing offer for those whose income is derived from
investments.
[...]
This semi-autonomous U.S. territory sets its own tax policy, and its
residents pay no federal tax on income derived locally. Mired in a
recession for almost a decade and with an unemployment rate stuck
above 13 percent, more than double the U.S. rate overall, it decided in
2012 to try to lure wealthy investors who would be likely to buy
expensive real estate, establish...[CONTINUE READING]
Read the whole story
· ·
CUBAN BASEBALL PLAYERS DEFECT IN PRby noreply@blogger.com (Admin)
From ABC News:
Two Cuban baseball players in Puerto Rico for the Caribbean Series
apparently have abandoned their team mid-tournament, Cuba's team
said Wednesday. The missing players were identified as 19-year-old
pitcher Vladimir Gutierrez and 29-year-old shortstop Dainer Moreira.
Gutierrez had not yet played in the series, while Moreira batted in
Cuba's only run against the Dominican Republic.
Cuba was scheduled to play against Puerto Rico Wednesday night after
losing its first two games against the Dominican Republic and Mexico.
The players' apparent decision to abandon their team to stay on
American soil comes amid moves to improve US-Cuba relations, with the
MLB on Tuesday eliminating its requirement that Cuban players obtain
a license from the U.S. government before they are eligible to sign
with big league teams...[MORE]
Puerto Rico News Digest For February 3, 2015by noreply@blogger.com (Admin)
CELAC CALLS FOR DECOLONIZATION
 |
| Photo: The Costa Rica News |
From The San Juan Daily Star:
With the support of Cuba and Venezuela, the heads of state and
government of the 33 member countries of the Community of Latin
American and Caribbean States (CELAC) have ratifi ed their call
for the decolonization of Puerto Rico to free the Caribbean of
colonies. Their common stand was included in the final decla-
ration of the Third Summit of Heads of State and Government of
CELAC, adopted late last week in Belén, Costa Rica and posted
on the group’s website. The leaders also reiterated the Latin
American and Caribbean nature of Puerto Rico, in line with the
stand assumed previously in the Declaration of Havana at the
end of the 2014 CELAC Summit.
MIGRANTS MISSING AFTER BOAT SINKS
From Fox News:
Twelve Dominican migrants were detained and an undetermined
number are still missing after the boat they were on sank
off a beach in the northwestern Puerto Rican town of Camuy,
authorities said Monday.
U.S. Customs and Border Protection official in Puerto Rico
Jeffrey Quiñones on Monday told Efe that the homemade boat
was 9 meters (29.5 feet) in length and sank last Friday off
the coast at Camuy.
NINE INDICTED OVER KILLING OF PRISON GUARD
From Inquisitr:
According to Fox News, nine different men from Puerto Rico have
been convicted for the murder of Lt. Osvaldo Albarati on February
26, 2013. All nine of them were inmates at the Metropolitan
Detention Center in Guaynabo, Puerto Rico, when the incident
occurred. Albarati had confiscated cellphones and other contraband
from the inmates. This provoked the nine inmates to retaliate.
The United States Attorney for the District of Puerto Rico, Rosa
Emilia Rodriguez, claimed that this was the first murder of a
United States federal agent in Puerto Rico. Rodriguez spoke at a
press conference on Friday, explaining that the nine defendants had
carefully planned to kill the Puerto Rican correctional officer as
a direct result of the confiscated items.
VENEZUELA, MEXICO WIN 1ST CARIBBEAN SERIES GAMES
From The Idaho Statesman:
San Diego Padres utilityman Alexi Amarista hit a two-run triple to
lead Venezuela to a 5-2 victory over host Puerto Rico and Mexico beat
Cuba 2-1 Monday in the opening games of the Caribbean Series. Cinci-
nnati Reds prospect Daryl Thompson gave up a run in six innings and
struck out five for the Venezuelan team, Los Caribes de Anzoategui.
Cleveland Indians minor leaguer Giovanni Soto got the loss for the
Puerto Rican team, Los Cangrejeros de Santurce.
PR ECONOMIC ACTIVITY FALLS 1.4% IN DECEMBER
From Reuters:
Puerto Rico's economic activity fell 1.4 percent year-on-year in
December, the U.S. Commonwealth's Government Development Bank
(GDB) said on Friday. The GDB's Economic Activity Index, which
tracks employment, gasoline sales and other indicators on the
island, slipped to 125.3 in December, 2014.
People protest outside the government pension headquarters in San Juan, Puerto Rico, Wednesday, Jan. 30, 2013. Nearly three years ago, former Gov. Fortuno established a committee charged with solving the pension fund’s fiscal problems. (AP Photo/Ricardo Arduengo)
Last November, I wrote about the dilapidated state of Puerto Rico and its economy, but I reserved hope that the island could be resuscitated by taking a course of decisive action.
Puerto Rico Gov. Alejandro Garcia Padilla has taken some economic action. (AP Photo/Ricardo Arduengo)
Unfortunately, recent news that Puerto Rico’s bonds were downgraded to junk status has only reinforced the severity of our island’s problems.
According to The Washington Post, this credit downgrade will make it extremely difficult for Puerto Rico to borrow money and, as a result, finance projects that could help reverse the tide.
Despite these setbacks, I still hold the steadfast belief that Puerto Rico can make the changes necessary to rejuvenate its economy and, once again, be recognized as premier travel and business destination in the Caribbean with a rich heritage and growing economy.
While Governor Alejandro García Padilla has taken some steps to implement austerity measures to reduce government costs, there are still more significant spending cuts needed in order to address the island’s $70 billion of debt.
Since Puerto Rico’s constitution prohibits the government from declaring bankruptcy, these cuts aren’t optional; action is required.
Even more morose than Puerto Rico’s budget situation is its unemployment rate, which currently stands at more than double the average in the United States.
There are a number of other economic indicators that point to a poor standard of living for most people in Puerto Rico.
The per capita income on the island is roughly $15,200 and nearly half of all households are food stamp recipients.
Let’s call a spade a spade – there are a lot of poor people in Puerto Rico today and the dire economic situation is driving the high crime rates – so much so that there were 1,136 murders in 2011.
The homeless population in Puerto Rico has risen sharply in an ongoing economic crisis. Officials say they expect the problem will only grow worse. (AP Photo/Ricardo Arduengo)
Although there is reason for hope considering the number of homicides fell to 883 in 2013, rampant crime is having an adverse effect on economic growth.
It is scaring away tourists and investors, which are one of the driving forces behind the island’s economy.
Resorts, hotels and restaurants, rely on the tourism industry and are finding it harder to persuade people to visit Puerto Rico, which is directly impacting their bottom line.
Investors rely on stability when considering investments.
All these conditions are driving an exodus of people from Puerto Rico to other parts of the Unites States. Island residents are also leaving for better opportunities in other places.
According to The New York Times, “In 2011 and 2012, the population fell by nearly 1 percent, according to census figures. From July 2012 to July 2013, it declined again by 1 percent, or about 36,000 people. That is more than seven times the drop in West Virginia, the state with the steepest population losses.”
The simple but hard truth is that states like California, Texas and Florida offer a better and more stable life.
Puerto Rico cannot let go of its professionals and young people so easily as it will have devastating consequences on the integrity of its workforce.
Puerto Rico’s talent is our life blood and we most stop the hemorrhaging. In order to prevent our best and brightest from fleeing to other destinations, we have to make the economy more attractive and offer incentives encouraging them to stay and build prosperous lives on the island.
Federal workers protest the government shutdown outside the Environmental Protection Agency office in Guaynabo, Puerto Rico, Tuesday, Oct. 8, 2013. As the partial government shutdown enters its second week, Democrats controlling the Senate plan to move quickly toward a vote to allow the government to borrow more money, challenging Republicans to a filibuster showdown as the time remaining to stop a first-ever default on U.S. obligations ticks by. (AP Photo/Ricardo Arduengo)
Additional measures can include looking at the current tax structure, which is in dire need of reform. Under the present tax code, many small- and medium-sized businesses with net profit margins fewer than five percent are penalized, some reportedly paying an effective tax rate of 130 percent.
This is the embodiment of the type of stifling policy that needs to be fixed immediately; otherwise, Puerto Rico will continue to face a plethora of problems over the long-term.
Puerto Rico public officials must make it a priority to proactively address problems by offering bold and sweeping reforms that will incentivize investment and retain our best assets.
While it is true that Puerto Rico’s situation has worsened since I last opined on the subject, I still have faith that with hard work and pro-growth policies Puerto Rico can once again prosper.
This island has everything to offer, we just need to implement meaningful solutions, so that it can realize its full potential.
Javier Ortiz is a Republican strategist, principal at Crane & Crane Consulting, and an advisor on public policy and regulations for a D.C.-based global law firm.
Read the whole story
· · · · · · · · ·
In this file photo, tourists walk through a parking lot in front of a pier where a cruise ship is docked in Old San Juan. Trade groups say the flourishing cruise ship industry injects about $2 billion a year into the economies of the Caribbean. Puerto Rico is looking to boos its industry, while tourism remains a short-term fix to its economic crisis. (AP Photo/Ricardo Arduengo)
Puerto Rico is courting Spain in what could be the Caribbean island’s first decisive step towards financial recovery as it has experienced almost a decade of financial crisis. The government in San Juan aims to become a sort of “investment bridge” between Spain and the U.S. by capitalizing on the island’s history of pharmaceutical production, as well as other industries such as banking and computer technology.
This is a bold move by the administration of Governor Alejandro Padilla. If successful, it could stop the “brain drain” of young educated Puerto Ricans who have chosen to migrate to the U.S., Spain or Latin America in search of better livelihood.
Puerto Rico Courts Madrid
Governor Padilla has intended to increase ties with Madrid over the past year. This was best exemplified by his trip to Spain on June 2013 with an entourage that included Alberto Baco, Secretary of Economic Development and Commerce, as well as Antonio Medina, Director of the Compañia de Fomento Industrial (PRIDCO).
The goal was to get the attention of Spanish and other European industries to theisland’s pharmaceutical industry.
Puerto Rico historically has had a strong industry of biosciences. It is estimated that 18% of pharmaceutical products in the U.S. are manufactured in Puerto Rico, such as Lipitor, Norvasc and Zocor.
A group of Spanish industrialists returned the favor and visited the Caribbean island this past February as part of a workshop ambitiously entitled: “Puerto Rico: Gateway to the United States Biotechnology Market.” The delegation was made up of representatives of Spanish companies such as CRB Inverbio, Health in Code and MGM Integrated Solutions.
The aforementioned Medina, director of PRIDCO, highlighted that “Puerto Rico has a history of over 50 years in the pharmaceutical industry, which has evolved and expanded into other industries” such as biotechnology.
An April 6 report by the Spanish news agency EFE summarizes Padilla’s new strategy: internationalize the island’s economy and create a platform for foreign firms that would like to export their services to the U.S. and for local companies who wish to break into the European market. (In other words, San Juan would become the proverbial middle man).
So far, it seems that San Juan has had limited success at bringing investment from Madrid.
The aforementioned EFE article explains how trade between Puerto Rico and Spain is “sparse” and the island exported $875 million USD worth of Spanish goods in 2012.
Plan B for Puerto Rico: Tourism
While the Padilla government aims to increase investment opportunities with Spain, he may have to rely on the well-tested tourism sector as a Plan B for short-term income.
This upcoming May a new Air Europa route will start between San Juan and Madrid. This could bring a significant increase of Spanish tourists, and their wallets, to the island for the summer 2014 tourist season. Ingrid Rivera, Puerto Rico’s Minister of Tourism, believes that this air route could bring up to 28 million euros to the island.
Moreover, Puerto Rico participated in the late January 2014 International Tourism Fair, which was held Madrid. Additionally, Puerto Rico will earmark as much as two million USD for a marketing campaign to attract more European tourists to the island.
There is also the hope that Iberia could once again restore flights to Puerto Rico. Due to financial problems the airline stopped flights to San Juan in early 2013.
Short Term Solutions?
Puerto Rico’s financial credibility has been hurt due to its $70 billion USD debt. Hence, analysts and scholars continuously compare the island to European nations in financial trouble.
In fact, the renowned Dr. Howard Wiarda from the University of Georgia wrote a commentary in which he argues that “uncertainty over the status issue [with the U.S.] makes it more difficult for Puerto Rico to renegotiate its large debts, while its inability to pay reinforces the notion […] that the island […] cannot govern themselves.” (Wiarda, “Puerto Rico: A Caribbean Greece?” March 2014).
People protest outside the government pension headquarters in San Juan, Puerto Rico, Wednesday, Jan. 30, 2013. Puerto Rico is confronting what economists and financial analysts say is a ticking fiscal time bomb. (AP Photo/Ricardo Arduengo)
Finally, this past January 28, the Center for International Security Studies hosted a conference with Dr. Jose Villamil, a Puerto Rican economist and Chairman & CEO of Estudios Tecnicos, a financial consulting firm in Puerto Rico.
During the Question & Answer section, I asked Villamil how the Puerto Rican government could stop the aforementioned brain drain of young educated individuals, who make up the cornerstone of any country’s workforce.
Villamil acknowledged that it is a major problem. One of his suggestions for a short term solution is investment in construction. He clarified that he did not mean ongoing large projects in the island such as a proposed train and the extension of a major expressway.
Villamil explained to the audience that he meant small infrastructure projects that can be built very quickly, particularly on the Western part of the island which is more undeveloped.
Nevertheless, he stressed that construction will not solve the island’s long term problems; this is just one short term solution.
Initiatives such as an alliance with Spain over pharmaceuticals, increasing tourism and short-term construction projects demonstrate how Puerto Rico has several options regarding how to jumpstart its economy. Hopefully one of them will work.
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Resident Commissioner Pedro R. Pierluisi announces the introduction of the bipartisan “Puerto Rico Statehood Admission Process Act” in the U.S. House of Representatives. Wednesday, February...
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