Wednesday, October 18, 2017

CofC, Bankers Association warn of economic impact if Puerto Rico gov’t furlough implemented

By on July 27, 2017

SAN JUAN – While Puerto Rico residents wait for Gov. Ricardo Rosselló to announce what his “alternative” to prevent workdays from being cut for public sector employees, the Puerto Rico Chamber of Commerce (CofC) warned Thursday that the measure would stall economic development.

The warning was voiced by the entity’s president, Alicia Lamboy-Mombille, who said the government should focus on measures that contribute to the island’s economic growth not on ones that threaten to negatively affect local commerce.

The CofC official said that, if the furlough were to come in effect Sept 1., the resulting reduction of public worker income would cause an adverse “cascade effect” for families and the Puerto Rican economy.

 

“The economy is fed by consumers who use their income to buy goods and services. Likewise, they fulfill their mortgage- and car-loan obligations. Everything would be affected, upsetting the social climate of [Puerto Rico] even more. This scenario should be avoided at all costs,” Lamboy-Mombille said in a written statement.

Puerto Rico fiscal board Chairman José Carrión listens while Gov. Ricardo Rosselló delivers a speech. (Juan J. Rodríguez / CB)

On Wednesday, the governor indicated that his administration intends to implement “other fiscal measures” to avoid cutting a workday a week to more than 100,000 public employees, and assured that these will not affect “the most vulnerable.”

Puerto Rico governor to announce ‘alternative’ to prevent workday reduction

“This is an alternative that will not affect the most vulnerable, does not contemplate employee layoffs and will not impact the growth of the economy in Puerto Rico,” the governor’s office, La Fortaleza, wrote, assuring that the workday elimination would have a negative impact of up to $500 million.

“We trust the initiatives the governor will announce will be in that direction. If so, he will have all our support,” Lamboy-Mombille said while emphasizing the Chamber of Commerce’s availability to discuss economic development measures with both the government and the fiscal control board, which would resort to the measure if the administration doesn’t meet its conditions.

Bankers Association joins call

Meanwhile, the Puerto Rico Bankers Association (PRBA) emphasized that a government furlough would affect the local economy, particularly the financial commitments related to mortgage, vehicle and personal loans of those who would be affected.

“For banking, as much as other industries, the greatest challenge remains the lack of economic growth. However, we are confident in the ability of our member banks to face this fiscal scenario and continue to support Puerto Rico,” PRBA executive vice president, Zoimé Álvarez Rubio said in a statment Thursday afternoon.

The nonprofit association also expressed its willingness to contribute in the development of measures that help reactivate the Puerto Rican economy, which in turn would lead to greater investment and number of jobs created.

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