CEPR report: Puerto Rico board prioritizes debt repayment amid humanitarian crisis
SAN JUAN ― In its newest proposed fiscal plan, Puerto Rico’s fiscal oversight board “makes steep cuts to public services in the pursuit of a budget surplus that can be used for debt repayment,” a report from the Center for Economic and Policy Research (CEPR) concludes.
The authors of “Puerto Rico’s New Fiscal Plan: Certain Pain, Uncertain Gain” conclude that the board’s fiscal plan is based on “overoptimistic macroeconomic assumptions, downplays the negative impacts of continued austerity, and fails to address many of the structural problems at the core of Puerto Rico’s lost decade, all while mandating a significant erosion of worker rights and reductions in public services,” the CEPR says in an introduction pointing to the report.
The think tank’s report examines the new fiscal plan proposed by the fiscal board, as well as a previous plan, released April 19, and finds that: “The labor reforms that are at the center of this plan will surely erode labor rights in Puerto Rico,” and that wages on the island are lower than on the U.S. mainland. “It is unlikely that in the context of Puerto Rico’s depressed economy this approach will lead to an increase in employment,” the paper concludes.
The board is also requesting work requirements for Puerto Rico’s welfare recipients, “despite the high unemployment rate and weak labor market,” the CEPR says. The board’s fiscal plan calls for further cuts to agencies, “especially to education and health care,” and “targets municipalities and local governments for budget cuts, despite that these are increasingly burdened with providing essential services. The Board’s plan mandates expenditure cuts of $9.5 billion, or 2.2 percent of GNP, and would privatize utilities.”
These cuts, the report adds, may result in greater outmigration from the island, worsening its economic downturn, “as a number of prominent economists have warned in an open letter,” the CEPR adds.
“The Board sadly does not appear to have Puerto Ricans’ safety and well-being as its top concern,” said CEPR researcher Lara Merling, who co-authored the report with Jake Johnston. “Puerto Rico remains in a serious humanitarian crisis, one that has already claimed thousands of lives. Preventing more needless deaths and economic deprivation should be the priority of all responsible authorities, including the governor and up to the president of the United States.”