Governor Wanda Vázquez with José Carrión and Natalie Jaresko. (GFR Media)

A week after becoming one of the first governors to decree a curfew and order businesses to shut down on the island, Governor Wanda Vázquez Garced yesterday announced an economic relief package to mitigate the impact of the measures aimed at containing the spread of COVID-19 since these measures have affected the daily and economic life of Puerto Ricans.

According to the announcement made yesterday by Vázquez Garced, different segments of the population will begin to receive the relief included in the plan, which is estimated at some $787 million and was developed in coordination with the Board.

The plan includes bonuses between $2,500 and $4,000 for those who are on the front lines of the battle against the virus and, at the same time, face the highest risk of contracting COVID-19.

There is also another $500 for nearly 170,000 self-employed people in Puerto Rico who ran out of money as of March 15. In essence, the economic response plan to COVID-19 includes a combination of strategies: direct payments to individuals and payments to small businesses with less than 50 employees that have been forced to close by government decree, as well as postponing the payment of certain taxes or increases in existing benefits, such as unemployment insurance.

"The measures we are taking will help us mitigate the economic impact of the crisis we are experiencing. Other measures are still under evaluation and we will communicate them in due time," said Vázquez Garced.

“This would be one of the most comprehensive and ambitious packages that have been awarded to deal with this crisis. Much more comprehensive measures than those offered nationwide,” the governor added.

According to Vázquez Garced, California recently announced a $500 million package, and the state of Washington allocated another $200 million to deal with the pandemic. The United States is now the third-highest infected nation in the world. As of yesterday, there were 374,921 confirmed coronavirus cases worldwide and 16,411 deaths, according to data compiled by Johns Hopkins University.

On the island, according to the Health Department, there are 31 cases of COVID-19 and two deaths.

Yesterday, the Vázquez Garced administration, which is still working to speed up testing for possible cases on the island, sought to soften the impact on people's finances, allocating $787 million, according to figures released by La Fortaleza and the Board.

Half of that money, about $397 million, will go to direct payments to individuals and seeks to ensure the continuation of the Department of Education's work through the purchase of tablets and training for online learning. The plan also includes funds for the purchase of equipment in hospitals and to assist municipalities.

However, when considering other strategies already implemented such as the $160 million from the Emergency Reserve and suspending the tax on prepared foods and certain health products, Board Executive Director Natalie Jaresko told El Nuevo Día that coronavirus countermeasures could total more than $1 billion.

The plan includes paying the salaries of 132,400 central government employees and 51,500 municipal employees, even if they are not working.

For Jaresko, the measures approved are the result of the joint work and of adjustment and fiscal discipline measures that have been taken over the past two years. “Right now, there are states in the mainland that do not have that flexibility," Jaresko said.

Yesterday, in an unprecedented event, Vázquez Garced addressed the 3.2 million Puerto Ricans from La Fortaleza, flanked by those who - according to PROMESA - have powers beyond her constitutional mandate: Jaresko and the Board chairman, José B. Carrión.

"In moments like this, it is most important to look for significant and reasonable fiscal policy solution for those fighting this virus and for the health and safety of Puerto Rico overall," Carrión said in a written statement after the governor's message.

Social isolation measures ordered by Vázquez Garced will continue until Sunday, however, according to sources, they will be extended.

Negotiations with the Board

Vázquez Garced - who took office after Ricardo Rosselló Nevares stepped down following mass protests and is running for the leadership of the New Progressive Party - revealed the relief package after a weekend of negotiations between herself, her team, and Jaresko, El Nuevo Día learned.

"The Board approved it on Sunday, around 10 p.m., now we are working on the execution," said Omar Marrero, executive director of the Fiscal Agency & Financial Advisory Authority (FAFAA).

Marrero, his team, and his counterparts at the Department of Finance and the Department of Economic Development and Commerce (DDEC) are in charge of implementing the plan.

"The first thing we are doing is coordinating with the Board to increase the budget and reallocate funds so this money can remain under the custody of the Office of Management and Budget and begins to flow," explained Marrero.

Payments

According to the official, payments will be made considering intelligence tools and processes in the Treasury Department. That is, the Treasury Department, using taxpayer's information and agency payroll information, will identify all people, whether they are nurses, police officers or self-employed.

"We are working to make it a stipend and see if a special payroll is easier or if it would be a fortnightly pay," Marrero said, in referring to bonuses to nurses, health technicians, emergency medical personnel, police, firefighters, and custody officers.

El Nuevo Día asked if the $3,500 bonus for police officers, firefighters, and custody officers would apply to municipal police officers.

"At the moment, it contemplated at the central government level, but the plan seeks to establish $100 million to cover two months of liquidity in municipalities and to define the best way to distribute that money because not all municipalities have suffered the same impact on their income," Marrero said.

Small businesses

In the case of small businesses, Marrero said, the payment will be made using the DDEC method to compensate entrepreneurs affected by the earthquakes in the southwestern region of the island.

This will mean that the DDEC will have to issue a form for affected businesses to fill out and that will consider the income reported in the municipality.

Marrero said the Treasury Department's goal is to begin issuing checks this week, but recalled that agencies are also operating on a limited basis.

How will the plan be paid?

The economic response, Marrero said, includes two steps. Firstly, the current budget will take part of this year's projected surplus - as bondholders are still not being paid - and will increase spending by some $500 million. They will also reallocate another $250 million already included in the budget representing efficiencies to the COVID-19 response package.

In the case of postponing tax payment, Marrero added, this is money will remain in the hands of taxpayers - which will benefit their liquidity now and later over the year – and that would reach public coffers once the crisis is stabilized.

Among other things, the plan suspends for two months, the 10 percent in contracts for professional services and paying the Sales and Use Tax (SUT) at docks and resale points.

Not all the economic injection would come from the government since the plan includes an agreement with banks and cooperatives so these entities grant moratoriums for up to three months on mortgages, car loans, credit cards and consumption to customers interested in that proposal.


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