Ravitch to Suggest Fixes to Puerto Rico’s Woes
SAN JUAN — For Richard Ravitch, Promesa’s fiscal oversight board is “the only hope” to solve Puerto Rico’s fiscal woes.
A former New York lieutenant governor, Ravitch was recently tapped by Gov. Alejandro García Padilla to act as his representative at the federally appointed board, of which the governor is a nonvoting member. Help from Washington is essential, Ravitch says, and the board’s recommendations will go great lengths in achieving it.
SEE: García Padilla Names a Rep for Promesa’s Fiscal Board
He arrived in the island Monday and participated in several meetings at La Fortaleza, including a work session on the García Padilla administration’s long-term fiscal plan, which will be presented to the board. He forewarned the press of a “majorly worse” fiscal panorama on the document, which is expected to be unveiled before the end of the month, as previously reported by Caribbean Business.
“My expectation is that the governor will have something to say in a week or so about the problems that his fiscal plan would address,” he conceded.
Meanwhile, Ravitch has already talked with four of the board’s seven voting members—Ana Matosantos, Arthur González, Andrew Biggs and David Skeel—and expects to meet the rest of them by next week. The board’s first meeting will “probably happen next week and probably in Washington,” he said.
Expectations of the board
Ravitch believes members could face a “steep learning curve.” Puerto Rico has underfunded pension systems, quickly depleting federal healthcare funds, a shrinking population, lower investment, and increasing unemployment and poverty.
He intends to offer the board suggestions on how to best tackle these issues.
When asked by Caribbean Business what recommended fixes for Puerto Rico he thinks the U.S. Treasury missed, he mentioned Act 154—the 4% excise tax on certain multinationals doing business on the island, currently set to phase out in 2017. It accounts for almost one-fourth, or $2 billion, of the island’s annual tax revenue.
SEE: Uncertainty Clouds One-Fourth of Puerto Rico’s Revenues
“All these [issues] pose enormous risks to a $10 billion governmental program,” Ravitch said, adding that the problem isn’t solved by reducing government and creating more poverty and unemployment.
As for Promesa’s congressional economic task force, he has had no contact so far with the group but expects to soon. “Everybody in Washington is totally consumed with these crazy elections,” Ravitch said. Nevertheless, he believes “Congress is not hostile” toward the Puerto Rico issue.
Meanwhile, he also seeks to meet Carlos García, José Carrión III and José Ramón González, the three other board members, within the next week. Ravitch, who considers himself “optimistic,” said he isn’t concerned about any of the board’s members, adding he would have to work with them before reaching that point.
Within the next few days, the board’s chairman is expected to be named, as required by the federal law.