Monday, July 24, 2017

Puerto Rico public debt decreased in 2016

By on April 7, 2017

SAN JUAN – The government of Puerto Rico’s total public debt—which includes that of the central government, municipalities and public corporations—decreased to $64.254 billion as of June 30, 2016, according to the 2016 Governor’s Economic Report.

“In fiscal year 2016, the total gross debt decreased by $1.928 billion or 2.9% when compared to the prior fiscal year’s closing debt, which amounted to $66.182. billion,” the report says.

Regarding the economic outlook for fiscal years 2016 and 2017, the report says that during fiscal year 2016 Puerto Rico’s economy registered a real reduction of 1.1% when compared to fiscal year 2015.

At current prices, the Gross Product (GP) reached $70.134 billion, rising 0.8%. Projections for the real GP base scenario were estimated at $6.127 billion for fiscal year 2017. “This would represent a 1.7% decrease compared to fiscal year 2016. In fiscal year 2018, the GP is expected to reach $6.038 billion, a decrease of 1.5%. At current prices, GP projections were $70.484 billion and $70.768 billion for fiscal years 2017 and 2018, respectively,” the report states.

Due to the degree of uncertainty present in every economic outlook and given Puerto Rico’s fragile economy, the Planning Board estimated two alternate scenarios to the baseline scenario, which are: pessimistic and optimistic. In the pessimistic scenario at constant prices, reductions of 2.6% and 2% were projected for fiscal years 2017 and 2018, respectively. As for the optimistic scenario, decreases of 0.8% in the real GP were projected for fiscal year 2017 and of 0.9% for fiscal year 2018.

Real personal consumption spending, the main component of the GP, totaled $9.262 billion in fiscal year 2016. This is equivalent to a reduction of 1.7% compared to fiscal year 2015. In real terms, the estimated value of this variable, for fiscal year 2017 is $9.224 billion, representing a decrease of 0.4% and for fiscal year 2018 the value is $9.203 billion, or a decrease of 0.2%. “At current prices, the estimated numbers for the mentioned years are $61.233 and $61.596 billion, representing growth of 0.1% and 0.5%, respectively,” the report says.

Government consumption costs, consisting of employee compensation and net purchases of goods and services by the Central Government and municipalities, totaled $8,634 billion at current prices, a decrease of 5.5% percent or $502.0 million below fiscal year 2015 levels, which reached $9.136 billion.

The total gross domestic investment—which registers investments made by private companies, public corporations and the government sector—at current prices amounts to $8.608 billion in fiscal year 2016. This represents a reduction of $176.6 million or 2% when compared with the $8.785 billion in fiscal year 2015.

SAN JUAN, PUERTO RICO - NOVEMBER 12:  Old San Juan, the center for Puerto Rican tourism, is viewed on November 12, 2013 in San Juan, Puerto Rico. The island territory of the United States, Puerto Rico, is on the brink of a debt crisis as lending has skyrocketed in the last decade as the government has been issuing municipal bonds. Market analysts have rated those bonds as junk and suspect it's 70 billion dollar debt might be unserviceable in the near future. With no industry other than tourism and the recent collapse of the real estate market, the way out is unclear. (Photo by Christopher Gregory/Getty Images)

The metro San Juan skyline is seen from Old San Juan. (Photo by Christopher Gregory/Getty Images)

In terms of transactions with the rest of the world, there was an estimated increase in sales of outbound goods and services in fiscal year 2016. In this fiscal year, sales of goods and services reached $81.209 billion.

The gross domestic product (GDP)—the most comprehensive measure of the production of goods and services in an economy in one year—closed at $10.049 billion compared to $10.318 billion in the previous fiscal year. This represented a contraction of $268.9 million or 2.6%.

Personal income, which represents the income received by people and non-profit institutions from all sources, reached $63,877 billion in fiscal year 2016 and grew by $23.1 million when compared to fiscal year 2015.

In fiscal year 2016, individuals’ financial assets amounted to $46.895 billion and reflected a 1.9% or $879.2 million growth. This increase is attributed to bank deposits, which totaled $21.426 billion. These rose 3.8% over fiscal year 2015 and accounted for 45.7% of individuals’ total financial assets.

Public pension fund reserves accounted for 27.4% of individuals’ total financial assets. They increased by 1.3% or $161.8 million in fiscal year 2016. Savings at local credit unions ranked third within individuals’ total financial assets. In fiscal year 2016, local credit union savings totaled $8.489 billion. Savings in federal credit unions increased by $25.9 million or 4.2%.

Savings in the Association of Employees of the Commonwealth of Puerto Rico (AEELA by its Spanish acronym) totaled $2.211 billion, an increase of 4.5% when compared to fiscal year 2015. Reserves in life insurance companies accounted for 2.7% of the total assets. In fiscal year 2016, they reached a value of $1.265 billion.

Consumer debt

Based on available information, consumer debt totaled $22.388 billion and reflected a decrease of $218.8 million or 1%. In fiscal year 2016, conditional sales companies constituted consumers’ main creditor, claiming 31.7% share of the total debt. This debt reflected an increase of $139.3 million or 2% when compared to fiscal year 2015.

Commercial banks ranked second in terms of total consumer debt, with a 25.5% share.

In terms of employment and unemployment, the Housing Survey of the Puerto Rico Labor Department showed that the average number of people employed in fiscal year 2016 was 992,000. Unemployed people amounted to 133,000 for an 11.8% unemployment rate.

 

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