Puerto Rico has the great opportunity to overcome its serious financial difficulties, thanks to the fiscal agreement between the Government and the Oversight Board. It is necessary that this purpose of strengthening public funds would be reflected in the government budget plan for FY 2019.
Puerto Rico needs this to be the first of the balanced budgets to comply with PROMESA´s objective to sound public finances. Therefore, it has to be translated into a clear step forward towards fiscal discipline.
The balance between public revenues and expenses will allow to restructure the public debt. This is an essential condition for the Island's return to capital markets and for economic revitalization that creates jobs.
Showing respect for the future of Puerto Rico, the Legislative Assembly is responsible to reach a rational budget that rules public disbursements as of July 1. To have a positive impact, the budget roadmap must be aligned with the range of structural reforms equally agreed between the Government and the Oversight Board under PROMESA’s guidelines.
The rise of the Puerto Rican economy will also depend on the reorganization of the government structure, as well as the reforms of tax, energy, labor and permit structures, among others. This range of changes is a significant bet to improve our competitiveness in global economy.
The resulting financial strength will place the government in a better position before the Federal Court where the Puerto Rican bankruptcy case is being discussed. The debt adjustment plan before Judge Laura Taylor Swain is key to let the financial world know that our Island has made an effort to be in a position to fulfill its obligations.
Moving towards that goal depends on a chain of execution events with a crucial link in the budget. We agree with Governor Ricardo Rosselló that the budget route requires everyone´s commitment especially since the hurricane aggravated the fiscal crisis we have been experiencing for more than a decade.
The budget plan submitted to the Legislature for FY 2018-2019 is for $ 8.73 billion, $7,015 billion allocated to government operation. The current budget is $ 9.5 billion. The difference shows that it is possible to make the agreed savings and adjustments.
The document also includes federal funds for post-hurricane reconstruction and Mi Salud (My Health) program. With the federal allocations, the consolidated budget totals $ 25,323 billion.
The agreement maintains power transformation as a priority, which is essential to give stability to the grid and attract private investment in a competitive system that includes the private sector. Meanwhile, the proposed tax model should be a stimulus for local entrepreneurship and foreign investment, while doing justice to individual taxpayers.
Structural reforms are part of a budget that stabilizes public finances, which now is the main task of legislative bodies. Meanwhile, government agencies are called to implement the changes that lead to a new stage of fiscal efficiency in public administration.
Therefore, this is the moment to give way to the implementation of healthy fiscal practices as preamble to fulfill obligations and boost economic development. The mission now is to create a budgetary structure that serves as prelude to the new Puerto Rico.
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