{ "id": "R44095", "type": "CRS Report", "typeId": "REPORTS", "number": "R44095", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 453142, "date": "2016-06-03", "retrieved": "2016-06-21T21:08:17.450819", "title": "Puerto Rico\u2019s Current Fiscal Challenges", "summary": "The government of Puerto Rico faces severe fiscal challenges. A federal district court judge in late March 2016 held that the island\u2019s government was insolvent and unable to pay its obligations on time. Emergency legislation (Act 21 of 2016) enacted on April 6, 2016, stated that the Puerto Rican government\u2019s fiscal condition \u201cis more dire than at any other point in its history\u201d and that \u201cdepleted resources and strained liquidity threaten to bind the Commonwealth to a choice between honoring its commitments to bondholders or continuing to provide the residents of Puerto Rico with essential services.\u201d On April 8, 2016, the Puerto Rican governor invoked emergency authorities to maintain essential public services.\nThe Puerto Rican government has been facing serious liquidity challenges and has lost normal access to credit markets despite measures taken by the island\u2019s government to reduce spending, increase revenues, and restructure its obligations. Much of the island\u2019s liquidity challenges stem from substantial debt service costs facing the central government and its public corporations. In August 2015, debt service on Public Finance Corporation bonds was not paid in full. The Puerto Rico Infrastructure Financing Authority (PRIFA) did pay interest in full on certain bonds due on January 1, 2016. On May 1, 2016, Governor Alejandro Garc\u00eda Padilla declared a moratorium on certain debt payments by the Government Development Bank (GDB), the government\u2019s fiscal agent, due on that date. The Commonwealth government doubts that it can make a larger debt service payment on July 1, 2016. On June 29, 2015, Governor Garc\u00eda Padilla stated during a televised address that \u201cthe debt is not payable.\u201d On the same day, a report commissioned from three former International Monetary Fund economists was released, which described severe short-term funding challenges as well as long-standing issues with key parts of the Puerto Rican economy and public sector. On September 9, 2015, a working group appointed by the governor released a plan that outlined its strategy. Puerto Rico\u2019s financing gap over the coming five years, according to the plan, is nearly $28 billion. The plan\u2019s proposals, along with hoped-for improvement in economic growth, were said to halve that gap.\nThe precarious state of Puerto Rico\u2019s public finances stems in part from prolonged economic weakness. Economic growth was sluggish even before the 2007-2009 recession, and projections suggest that the economy is contracting. Past analyses noted low employment and labor participation rates, high rates of outmigration leading to a decline in population, an economic structure shaped more by tax advantages than comparative advantages, and intensified global competition, among other factors. Others point to weaknesses in fiscal and operational controls. \nIn October 2015, the U.S. Department of the Treasury set out a reform framework and called on Congress to pass legislation to aid Puerto Rico. Resident Commissioner Pierluisi introduced H.R. 870 on March 16, 2015; the bill would restore the island\u2019s access to chapter 9 of the Bankruptcy Code. Senator Blumenthal introduced a similar measure (S. 1774) on July 15, 2015. On December 9, 2015, Representative Sean Duffy introduced H.R. 4199, a measure to provide fiscal oversight and a debt restructuring process. Senator Hatch introduced a similar measure (S. 2381) on the same day. On December 18, 2015, Representative Pelosi introduced H.R. 4290 and Senator Warren introduced S. 2436, both measures to stay debt-related litigation. On March 14, 2016, Senator Menendez introduced two bills (S. 2675, S. 2676) that would allow adjustments of Puerto Rico\u2019s debt. The House Natural Resources Committee issued a discussion draft on March 29, 2016. Representative Duffy introduced the Puerto Rico Oversight, Management, and Economic Stability Act (H.R. 4900) on April 12, 2016, and a revised version (H.R. 5278) on May 18, 2016, which would set up an Oversight Board for Puerto Rico and create a process to restructure the island\u2019s debts, among other provisions.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R44095", "sha1": "6d91f7f76753cd4f717823b95d1b3379116d56f6", "filename": "files/20160603_R44095_6d91f7f76753cd4f717823b95d1b3379116d56f6.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R44095", "sha1": "93f8c4cd034995d8b0868866979bccf9b5bcadd2", "filename": "files/20160603_R44095_93f8c4cd034995d8b0868866979bccf9b5bcadd2.pdf", "images": null } ], "topics": [] }, { "source": "EveryCRSReport.com", "id": 452221, "date": "2016-05-02", "retrieved": "2016-05-24T19:14:23.848941", "title": "Puerto Rico\u2019s Current Fiscal Challenges", "summary": "The government of Puerto Rico faces severe fiscal challenges. A federal district court judge in late March 2016 held that the island\u2019s government was insolvent and unable to pay its obligations on time. Emergency legislation (Act 21 of 2016) enacted on April 6, 2016, stated that the Puerto Rican government\u2019s fiscal condition \u201cis more dire than at any other point in its history\u201d and that \u201cdepleted resources and strained liquidity threaten to bind the Commonwealth to a choice between honoring its commitments to bondholders or continuing to provide the residents of Puerto Rico with essential services.\u201d On April 8, 2016, the Puerto Rican governor invoked emergency authorities to maintain essential public services.\nThe Puerto Rican government has been facing serious liquidity challenges and has lost normal access to credit markets despite measures taken by the island\u2019s government to reduce spending, increase revenues, and restructure its obligations. Much of the island\u2019s liquidity challenges stem from substantial debt service costs facing the central government and its public corporations. In August 2015, Puerto Rico did not make a full interest and principal payment due on bonds issued by the Public Finance Corporation. On May 1, 2016, Governor Alejandro Garc\u00eda Padilla issued an order to declare a moratorium on certain debt payments by the Government Development Bank (GDB), the government\u2019s fiscal agent, due on May 2, 2016. The Commonwealth government\u2019s ability to make a larger debt service payment on July 1, 2016, is in doubt.\nOn June 29, 2015, Governor Garc\u00eda Padilla stated during a televised address that \u201cthe debt is not payable.\u201d Garc\u00eda Padilla said his administration would seek concessions from the island\u2019s creditors as part of a new fiscal strategy, which would be developed by a newly established working group on economic recovery and debt restructuring. On the same day, a report commissioned from three former International Monetary Fund economists was released, which described severe short-term funding challenges as well as long-standing issues with key parts of the Puerto Rican economy and public sector. On September 9, 2015, a working group appointed by the governor released a plan that outlined its strategy. Puerto Rico\u2019s financing gap over the coming five years, according to the plan, is nearly $28 billion. The plan\u2019s proposals, along with hoped-for improvement in economic growth, were said to halve that gap.\nThe precarious state of Puerto Rico\u2019s public finances stems in part from prolonged economic weakness. Economic growth was sluggish even before the 2007-2009 recession, and forecasts project continued slow growth. Past analyses noted low employment and labor participation rates, high rates of outmigration leading to a decline in population, an economic structure shaped more by tax advantages than comparative advantages, and the effects of intensified global competition, among other factors. Others have pointed to weaknesses in fiscal and operational controls. \nIn October 2015, the U.S. Department of the Treasury set out a reform framework and called on Congress to pass legislation to aid Puerto Rico. Resident Commissioner Pierluisi introduced H.R. 870 on March 16, 2015; the bill would restore the island\u2019s access to chapter 9 of the Bankruptcy Code. Senator Blumenthal introduced a similar measure (S. 1774) on July 15, 2015. On December 9, 2015, Representative Sean Duffy introduced H.R. 4199, a measure to provide fiscal oversight and a debt restructuring process. Senator Hatch introduced a similar measure (S. 2381) on the same day. On December 18, 2015, Representative Pelosi introduced H.R. 4290 and Senator Warren introduced S. 2436, both measures to stay debt-related litigation. On March 14, 2016, Senator Menendez introduced two bills (S. 2675, S. 2676) that would allow adjustments of Puerto Rico\u2019s debt. The House Natural Resources Committee issued a discussion draft on March 29, 2016. On April 12, 2016, Representative Duffy introduced the Puerto Rico Oversight, Management, and Economic Stability Act (H.R. 4900), which would set up an Oversight Board for Puerto Rico and create a process to restructure the island\u2019s debts.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R44095", "sha1": "4f57c4b86045f26d449057230b2a9a7c88f387e7", "filename": "files/20160502_R44095_4f57c4b86045f26d449057230b2a9a7c88f387e7.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R44095", "sha1": "dfc046166a7d07f11e0453f939ed031fe7382e67", "filename": "files/20160502_R44095_dfc046166a7d07f11e0453f939ed031fe7382e67.pdf", "images": null } ], "topics": [] }, { "source": "EveryCRSReport.com", "id": 451553, "date": "2016-04-11", "retrieved": "2016-04-12T15:42:37.687388", "title": "Puerto Rico\u2019s Current Fiscal Challenges", "summary": "The government of Puerto Rico faces severe fiscal challenges. A federal District Court judge in late March 2016 held that the island\u2019s government was insolvent and unable to pay its obligations on time. Emergency legislation (Act 21 of 2016) enacted on April 6, 2016, stated that the Puerto Rican government\u2019s fiscal condition \u201cis more dire than at any other point in its history\u201d and that \u201cdepleted resources and strained liquidity threaten to bind the Commonwealth to a choice between honoring its commitments to bondholders or continuing to provide the residents of Puerto Rico with essential services.\u201d On April 9, 2016, the Puerto Rican governor invoked emergency authorities to maintain public operations.\nThe Puerto Rican government has been facing serious liquidity challenges despite several measures taken by the island\u2019s government to reduce spending, increase revenues, and restructure its obligations. The island\u2019s government has lost normal access to credit markets. Much of the island\u2019s liquidity challenges stem from substantial debt service costs facing the central government and its public corporations. Much of the Puerto Rican government\u2019s revenue stream for the first part of its fiscal year, which began on July 1, is earmarked to redeem revenue bonds. At the beginning of August 2015, Puerto Rico did not make a full interest and principal payment due on bonds issued by the Public Finance Corporation, a subsidiary of the island\u2019s Government Development Bank (GDB), the island government\u2019s fiscal agent. Whether the GDB can meet a May 1, 2016 debt service payment is in doubt, as is the Commonwealth government\u2019s ability to make a larger debt service payment on July 1, 2016.\nOn June 29, 2015, Puerto Rico\u2019s governor, Alejandro Garc\u00eda Padilla, stated during a televised address that \u201cthe debt is not payable.\u201d Garc\u00eda Padilla said his administration would seek concessions from the island\u2019s creditors as part of a new fiscal strategy, which would be developed by a newly established working group on economic recovery and debt restructuring. On the same day, a report commissioned from three former International Monetary Fund economists was released, which described severe short-term funding challenges as well as long-standing issues with key parts of the Puerto Rican economy and public sector. On September 9, 2015, a working group appointed by the governor released a plan that outlined its strategy plan. Puerto Rico\u2019s financing gap over the coming five years, according to the plan, is nearly $28 billion. The plan\u2019s proposals, along with hoped-for improvement in economic growth, were said to halve that gap.\nThe precarious state of Puerto Rico\u2019s public finances stems in part from prolonged economic weakness. Economic growth has been sluggish even before the 2007-2009 recession, and official forecasts project a continuation of slow growth. Previous analyses have pointed to low employment and labor participation rates, high rates of outmigration leading to a decline in population, an economic structure shaped more by tax advantages than comparative advantages, and the effects of intensified global competition, among other factors. Others have pointed to weaknesses in fiscal and operational controls. \nIn October 2015, the U.S. Treasury Department set out a reform framework and called on Congress to pass legislation to aid Puerto Rico. Resident Commissioner Pierluisi introduced H.R. 870 on March 16, 2015, that would restore the island access to chapter 9 of the Bankruptcy Code. Senator Blumenthal introduced a similar measure (S. 1774) on July 15, 2015. On December 18, 2015, Representative Pelosi introduced H.R. 4290, a measure to stay debt-related litigation. Senator Warren introduced a companion measure (S. 2336) on the same day. Representative Sean Duffy introduced H.R. 4199, a measure to provide fiscal oversight and a process for debt restructuring, on December 9, 2015. Senator Hatch introduced a similar measure (S. 2381) on the same day. The House Natural Resources Committee issued a discussion draft on March 29, 2016, of the Puerto Rico Oversight, Management, and Economic Stability Act.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R44095", "sha1": "429289c2bdbee6645bd86c75aa36065979ba734d", "filename": "files/20160411_R44095_429289c2bdbee6645bd86c75aa36065979ba734d.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R44095", "sha1": "059b8a757a06fef2b73820ef52a539437ad11086", "filename": "files/20160411_R44095_059b8a757a06fef2b73820ef52a539437ad11086.pdf", "images": null } ], "topics": [] }, { "source": "EveryCRSReport.com", "id": 445951, "date": "2015-09-25", "retrieved": "2016-04-06T18:18:31.256940", "title": "Puerto Rico\u2019s Current Fiscal Challenges", "summary": "The government of Puerto Rico faces multiple fiscal challenges in the fall of 2015. Concerns regarding the sustainability of Puerto Rico\u2019s public finances have intensified over the past year, despite several measures taken by the island\u2019s government to reduce spending, increase revenues, and restructure its obligations. The Puerto Rican government outlined a medium-term strategy to address those challenges in a fiscal plan put forth in mid-September 2015. \nA recent financial liquidity analysis projects that the government would likely run out of money by November 2015. Much of the island\u2019s liquidity challenges stem from substantial debt service costs facing the central government and its public corporations. The Puerto Rican government had warned that it may \u201clack sufficient resources to fund all necessary governmental programs and services as well as meet debt service obligations for fiscal year 2016,\u201d although it had earlier contended that it has sufficient funds available. Much of the Puerto Rican government\u2019s revenue stream for the first part of its fiscal year, which began on July 1, is earmarked to redeem revenue bonds. At the beginning of August 2015, Puerto Rico did not make a full interest and principal payment due on bonds issued by the Public Finance Corporation, a subsidiary of the island\u2019s Government Development Bank.\nOn June 29, 2015, Puerto Rico\u2019s governor, Alejandro Garc\u00eda Padilla, stated during a televised address that \u201cthe debt is not payable.\u201d Garc\u00eda Padilla said his administration would seek concessions from the island\u2019s creditors as part of a new fiscal strategy, which would be developed by a newly established working group on economic recovery and debt restructuring. On the same day, the Puerto Rican government released a report it had commissioned from three former International Monetary Fund economists. The report described severe short-term funding challenges as well as long-standing issues with key parts of the Puerto Rican economy and public sector. On September 9, 2015, a working group appointed by the governor released a plan that outlined a strategy for addressing the island\u2019s fiscal and economic challenges. Puerto Rico\u2019s financing gap over the coming five years, according to the plan, is nearly $28 billion. Proposals put forth in the plan, along with a hoped-for improvement in economic growth, were said to cut that gap in half. Some criticized the plan, calling for sharper cuts in spending or for better protections for creditors, and have questioned some of the plan\u2019s underlying assumptions.\nThe island\u2019s ability to access credit markets appears highly uncertain. The Puerto Rican government, either directly or through financing arms, had been able to issue bonds, but on relatively expensive terms. On July 3, 2015, the government enacted a law to enable issuance of revenue bonds by publicly owned insurers with the aim of providing liquidity for the public sector for the first part of the fiscal year, which began on July 1. The Puerto Rican government and its electric power utility made scheduled bond payments at the beginning of July 2015. The power utility and certain investors reached a preliminary debt relief agreement on September 1, 2015. The island\u2019s ability to meet future debt service payments depends in part on the willingness of investors to roll-over existing debt. A $2.9 billion bond sale which the Puerto Rican government had contemplated appears to be on hold. The island\u2019s water and sewer authority, however, may issue new revenue bonds to fund infrastructure improvements.\nThe precarious state of Puerto Rico\u2019s public finances stems in part from prolonged economic weakness. Economic growth has been sluggish even before the 2007-2009 recession, and official forecasts project a continuation of slow growth. Previous analyses have pointed to low employment and labor participation rates, high rates of outmigration leading to a decline in population, an economic structure shaped more by tax advantages than comparative advantages, and the effects of intensified global competition, among other factors. Others have pointed to weaknesses in fiscal and operational controls. This report will be updated as events warrant.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R44095", "sha1": "27856f313fabc6cfe138907494a5e3b5c8b63351", "filename": "files/20150925_R44095_27856f313fabc6cfe138907494a5e3b5c8b63351.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R44095", "sha1": "db4e944c860494e6e685e2534bcdfa50db6f3790", "filename": "files/20150925_R44095_db4e944c860494e6e685e2534bcdfa50db6f3790.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc770562/", "id": "R44095_2015Aug18", "date": "2015-08-18", "retrieved": "2015-11-04T09:58:14", "title": "Puerto Rico's Current Fiscal Challenges: In Brief", "summary": "This report discusses the current state of Puerto Rico's public finances. Puerto Rico faces several fiscal hurdles in 2015. Concerns regarding the sustainability of Puerto Rico's public finances have intensified over the past year, despite several measures taken by the island's government to reduce spending, increase revenues, and restructure its obligations.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150818_R44095_a932a2fd0ee16b0b15c7cf769999cbf27656a99f.pdf" }, { "format": "HTML", "filename": "files/20150818_R44095_a932a2fd0ee16b0b15c7cf769999cbf27656a99f.html" } ], "topics": [ { "source": "LIV", "id": "Budgets", "name": "Budgets" }, { "source": "LIV", "id": "Public finance", "name": "Public finance" }, { "source": "LIV", "id": "Fiscal policy", "name": "Fiscal policy" }, { "source": "LIV", "id": "Economic policy", "name": "Economic policy" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc700599/", "id": "R44095_2015Jul07", "date": "2015-07-07", "retrieved": "2015-08-27T16:20:31", "title": "Puerto Rico's Current Fiscal Challenges: In Brief", "summary": "This report discusses the current state of Puerto Rico's public finances. Puerto Rico faces several fiscal hurdles in 2015. Concerns regarding the sustainability of Puerto Rico's public finances have intensified over the past year, despite several measures taken by the island's government to reduce spending, increase revenues, and restructure its obligations.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150707_R44095_28c3e395c007fc04426e8289f6f3dd662658f286.pdf" }, { "format": "HTML", "filename": "files/20150707_R44095_28c3e395c007fc04426e8289f6f3dd662658f286.html" } ], "topics": [ { "source": "LIV", "id": "Budgets", "name": "Budgets" }, { "source": "LIV", "id": "Public finance", "name": "Public finance" }, { "source": "LIV", "id": "Fiscal policy", "name": "Fiscal policy" }, { "source": "LIV", "id": "Economic policy", "name": "Economic policy" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc811980/", "id": "R44095_2015Jun30", "date": "2015-06-30", "retrieved": "2016-03-19T13:57:26", "title": "Puerto Rico\u2019s Current Fiscal Challenges: In Brief", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150630_R44095_e1f3a5abb915a5374d254a4a343de49ec0a0f99a.pdf" }, { "format": "HTML", "filename": "files/20150630_R44095_e1f3a5abb915a5374d254a4a343de49ec0a0f99a.html" } ], "topics": [] } ], "topics": [ "Economic Policy", "Energy Policy", "Foreign Affairs" ] }