Puerto Rico’s government deficit reaches alarming levels
SAN JUAN – The transition committee president of the incoming government administration, Elías Sánchez, said Monday that the deficit left by the administration of Gov. Alejandro García Padilla is of more than $6 billion, while the outgoing government maintains the deficit is of about $3 billion.
The contradicting figures and differences in how to evaluate the government’s fiscal crisis were key issues throughout the first transition hearings held in the State Department.
“The deficit surpasses $6 billion. Initially, the Office of Management & Budget [OGP by its initials] tried to say there wasn’t a deficit, hiding the reality of how they financed deficits. They have been using reimbursement money, money from government suppliers and the Retirement System’s advances to finance the deficit and not make any adjustment to excessive government expenditures, keeping other expenses to Spain and external advisers that have cost more than $410 million paid with pensioners’ funds, who don’t know their money has been used for that,” Sánchez said during a press conferences after the first day of transition hearings.
However, Secretary of State Víctor Suárez, who presides over García Padilla’s transition team, clarified in another press conference that the government’s deficit totals some $3 billion, and that the measures the administration implemented to continue providing essential services aren’t new, such as withholding income tax reimbursements and payments to suppliers.
“The government’s cash insufficiency is of $3 billion if the debts are paid in June. We have provided that information to Treasury; it [can be accessed] with just one click on the internet. It isn’t new, we have disclosed constantly. The incoming committee has a confusion and doesn’t know how to distinguish between a budgetary allocation and cash, leading them to communicate those errors. The insufficiency is of $3 billion and they are using this forum to look for excuses and not tell the country what they should say. What’s the plan to address the country’s fiscal situation? Is their path going to affect pensioners and public employees or is it restructuring the debt? They are looking for excuses and they have Promesa’s Title III. The solution is the debt’s restructuring not affecting the most vulnerable, and they are using the transition hearings as a forum to use it as an excuse,” Suárez said alongside the governor’s fiscal team.
Sánchez reiterated that the government’s deficit totals $6 billion in only two years if one adds to Treasury’s deficit projection of $3.5 billion, the $1.3 billion not paid in July 2016 as part of the general obligation [GO] debt, this year’s debt payment of nearly $1.3 million and the $1 billion debt to suppliers.
“In two years, the deficit is more than $6 billion. What happened today is a shame for Puerto Rico because the people are the ones suffering. These financial decisions rebound on the people. This administration used its money to finance ‘gastos alegres,'” he reiterated using the Spanish term for unnecessary, or excessive, expenses.
Sánchez, meanwhile, denounced that García Padilla’s government withdrew $580 million from the retirement systems without letting pensioners know, as shown in a graph from a U.S. Treasury report.
“They left out the money they were taking from the Retirement Fund, and that information was provided to me by the Treasury. They took $580 million from the Retirement System in fiscal year 2016. That’s not transparency,” he stressed.
Caribbean Business asked the secretary of state about Sánchez’s accusation of taking $580 million and he replied that that information is incorrect and that García Padilla’s administration has always made sure to comply pensioners’ payroll.
“The retirement money has been used to pay pensioners. No withdrawal has been made from the systems,” affirmed Suárez.