July 6, 2020 Read More →

Puerto Rico economy needs major overhaul before future outlook improves

The Bond Buyer ($):

The future of Puerto Rico is cloudy. The economy has been in decline for all but two years since 2006, the government is loaded with debt, much of it in default, and competing forces are litigating its future.

For the territory to improve, sources said the Oversight Board and the local government should act differently in the next in the next few years to put it on solid footing.

“The Puerto Rican leadership needs to develop a working plan rooted in community needs that places all interests into a workable context,” said Tom Sanzillo, director of finance at Institute for Energy Economics and Financial Analysis.

“The bondholders must end their insistence on unrealistically high levels of repayment of legacy debt. Their continued pressure for repayment plans that bear no relationship to Puerto Rico’s economic reality is an impediment to fiscal solvency, sound economic growth, and political consensus,” Sanzillo said.

Center for Popular Democracy Co-director of Community Dignity Campaigns Lopez Varona said the board “should be abolished. The board was created, and has acted, as a representative of the bondholders. As part of our demands on recovery and reconstruction efforts, we believe that there are models of community that can be implemented to make sure that resources are used in an equitable and proper manner.

“Legislation should also be passed to protect pension holders, rectify labor cuts, and labor incentives such as increases in the minimum wage should be implemented,” Lopez Varona said.

All observers think governing bodies have to change their behavior, but they differ on the shape of that change. 

[Robert Slavin]

More: Puerto Rico experts, participants discuss its future

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