Almost a year after the impact of hurricane Maria, Puerto Rico’s economic short-term outlook remains uncertain. Despite the several packages of federal aid approved by Congress ($30 billion), is not clear how the government and the Fiscal Oversight Board (FOB) are going to work together to implement the structural reforms required to achieve sustainable growth.
For the first time, since 2012, the local economy will enter positive ground with an estimated growth of 4.3%, but the main drivers for the expected growth for fiscal years 2019 and 2020 are the federal reconstruction funds sent by Washington.
Nevertheless, Puerto Rico still has a long way to find the path for sustainable growth. PROMESA signed into law in 2016, still a big question, and the statute just provides a legal framework to manage the fiscal mess created by local governments, and the guidelines to restructure to $70 billion debt. Congress nor the local government are in the business of creating effective economic policies to revert 12 years of permanent depression.
Furthermore, the financial community remains skeptical about the debt restructuring process and the fiscal reform required by PROMESA. Partisan politics remains as Puerto Rico’s main obstacle to finding the way out bankruptcy and stagnation. Two years after the imposition of PROMESA, and a destructive hurricane, the administration is in continuous conflict with the FOB, and litigation fees are increasing dramatically.
A better future is possible, but all sectors in Puerto Rico must work together on a common agenda of fiscal and economic reforms.