Thursday, July 19, 2018

Survey: Economists disapprove of administration’s economic development efforts

By on February 23, 2018

SAN JUAN — A second survey by the Puerto Rico Economists Association (AEPR by its Spanish acronym) reflected a tendency in its membership to disapprove of the Gov. Ricardo Rosselló administration’s economic development efforts.

The survey was carried out by the association to learn of its members’ position regarding the proposals and economic arguments pushed by the government.

The survey revealed consensus regarding multiple public policy proposals, such as 84 percent of the economists do not believe that economic growth for 2019 will be 8.4 percent, as suggested by the fiscal plan.

Likewise, 72 percent of the members do not believe that the privatization of the Puerto Rico Electric Power Authority (Prepa) will benefit the island’s economic development.

Also, 81 percent of the economists are against eliminating $423 million in subsidies to the University of Puerto Rico, while 62 percent believe the privatization of PR-22 was not beneficial for economic development.

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In addition, 77 percent of economists favor a moratorium on the debt’s payment for five years; 72 percent favor a greater than 60 percent reduction of the debt’s principal—as proposed by economists Martin Guzman, Joseph Stiglitz, and Pablo Gluzmann—and 81 percent said incentives and subsidies to companies that are not creating jobs should be eliminated.

In general, more than 81 percent believe that the island’s fiscal oversight board and the government are poorly advised in financial matters.

“The perception that economists do not agree on anything is incorrect. On the contrary, on many of the issues there is a consensus among most economists, many of whom are never consulted or given serious consideration. That is an integral part of the current crisis,” AEPR President José Caraballo said.

With respect to the compilation and preparation of statistics, 93 percent of respondents consider the financial and human resources allocated to prepare statistics in Puerto Rico are insufficient; 83 percent disagree with the integration of the Puerto Rico Statistics Institute (PRSI) to the Economic Development & Commerce Department; and 90 percent is against the entity’s privatization.

“There is consensus that instead of eliminating the SI, the government’s policy should be aimed at strengthening it. If the collection of statistics is not strengthened, we will continue to have uncertain credibility before the markets and the island in general because it is a necessary transparency measure. In addition, having reliable data generates healthy public policies anchored in reality,” AEPR Vice President Alba Brugueras said.

The survey also found consensus in proposals that have not been seriously considered.

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Among these, 67 percent of the economists support a tax increase on  luxury goods and services; 87 percent said they were against trickle-down economics, the theory that growth among the largest businesses will eventually benefit the entire economy. Also, 75 percent believe that the creation of work cooperatives and incentives for agriculture, and agri-ecotourism are important.

However, there was little consensus on whether the privatization of the Luis Muñoz Marín International Airport and PR-22 were beneficial or on the importance a second labor reform.

The AEPR indicated that the survey was conducted among 69 affiliated economists, which it stressed is a relatively high sample based on its number of members.

The entity’s spokespeople clarified that the survey did not receive any financial or institutional support from any other organization, and added that they will continue to hold conferences and events in the coming months that will be available to their members and the public.

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