The government's Chief Financial Officer, Raúl Maldonado, assured that Puerto Rico is experiencing a "sustained" economic growth which, in his opinion, can be seen in the increase in revenues achieved by the Department of the Treasury during the period of income tax returns last April.
Maldonado accepted that the economic improvement on the island is largely due to public and private investments associated with the Puerto Rican reconstruction after Hurricanes Irma and María. Those investments are limited and are projected to decline significantly by FY 2020.
However, Maldonado argued that this is not the only area of growth since reports show an improvement in the economic activity of small and medium businesses, a sector that submitted in April 10,000 return forms more than in the previous fiscal year.
"We are going to have four or five years of (economic) growth... With the structural changes and the investments that are coming, there is an incredible appetite for investment developing in Puerto Rico," the official predicted.
However, the official projections in the current fiscal plan predict a different scenario. The document, for example, projects that even implementing all the reforms included in the plan, for FY 2021 the economy would grow by less than 1 percent. In the previous years, the economy remains on positive ground as a result of public and private investments in the reconstruction of Puerto Rico.
"We have about 10,000 more vendors (forms filed). There are people entering the formal economy. And we are taking many actions. It's not just a silver bullet," said Maldonado.
How can sustainable economic improvement be possible when projections anticipate less economic activity in the coming years and when reconstruction funds, which are limited, seem to be held up in Washington?
— So far it has been sustainable. And we are going to receive those funds. They're a little late. That's all.
So the fiscal plan projections are wrong?
— The fiscal plan is a tool for working with bondholders.
What does that mean? Are the projections wrong?
— The projections are fluid.
Maldonado stressed that these estimates are "subject to change", thus undermining the credibility of the forecasts of economists hired by the Oversight Board.
Fiscalization to curb tax evasion
Maldonado indicated tax scrutiny measures to curb tax evasion –as a result of a collaborative effort between the Treasury and the Justice Department- has influenced the improvement in revenues.
Justice Secretary Wanda Vázquez said that since 2017, they have managed to increase by 122 percent the money recovered through the criminal prosecution of tax evaders.
For example, in FY 2018, they collected $ 405,000 after filing 17 cases against evaders. That figure, for FY 2019, which ends on June 30, is already at $ 902,055, with about five cases in court, Vázquez said. In 2016, they only recovered $ 156,000 in 13 cases filed.
"This has resulted in a dissuasive measure because individuals and businesses have increased their responsibility," said Vázquez.
On the other hand, Vázquez noted that Justice created a special office to deal with economic crimes and that prosecutors working on these cases are assisted by internal revenue agents.
"The office has a 100 percent conviction rate. There were no exonerations here," she said.
"There are people who took calculated risks on their forms and when they saw others who took risks and are being prosecuted, then, they go to the agency to correct that and pay what they owed in contributions," Maldonado added.
The official said that the previous public policy was to close businesses with tax debts, a practice that only allowed to recover approximately $ 150,000.