Jagged Fiscal Peaks
For all its beauty, pristine beaches, forests and centuries-old architecture, Puerto Rico today is known widely as the land of fiscal cliffs and empty basins. Those rocky debt promontories and infrastructure valleys have come to the forefront once again.
In the financial realm—to quote the legendary Yankee catcher Yogi Berra: “It is déjà vu all over again”—as the Puerto Rico Legislative Assembly is in an annual harangue over the formula to balance the budget as if they were the masters of their own domain.
The lawmakers know full well that the pro forma measure must ultimately be certified by the Financial Oversight and Management Board (FOMB). In fact, House Speaker Rafael “Tatito” Hernández Montañez and Senate President José Luis Dalmau were at loggerheads after lawmakers failed to pass a $12.5 billion commonwealth budget before the midnight on Monday deadline set by the FOMB. The oversight board said on Tuesday that it will proceed to certify its own budget (see Top Story on page 4).
The entity, enabled by the Puerto Rico Oversight, Management and Economic Stability Act (Promesa), has full control over the island’s financial affairs. This unfortunate truth has consistently led to saber-rattling by a trifecta of administrations that have all employed populist rhetoric against austerity measures imposed by the FOMB—only to succumb in the end.
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