Just days before the budget for the next fiscal year comes into effect, Puerto Rico has to get rid of any hint of paralysis, strengthening its institutional stability and undertaking priority actions that address fiscal balance and economic development.
Official investigations into alleged public corruption and against the island´s leadership has resulted in deep concern and strong consternation in Puerto Rico. Amid confusion that is sowing uncertainty, the business sector has wisely offered clear recommendations that would allow the government to strengthen its credibility to undertake the island’s recovery, while the allegations of corruption are thoroughly investigated.
In the immediate term, the best way to deal with this current uncertainty is to work to recover from the damage caused by the hurricanes. And in that sense, it is urgent to speed up the release of the federal funds already allocated. The island´s political leadership is responsible to build the trust that will allow the flow of those resources to Puerto Rico.
The unavoidable goal of balancing the budget requires, in turn, working in harmony with the Oversight Board, created under PROMESA to address the island´s obligations. Once the debt restructuring process is complete, Puerto Rico will be in a position to provide better services to citizens and undertake its development.
Collaboration between the local government and the Board has allowed reaching important pre-agreements with part of the creditors, bringing significant savings to the island. This is the case of pre-agreements with the Electric Power Authority, COFINA, and the Government Development Bank bondholders, among others. Negotiations with other PREPA creditors and with Aqueducts and Sewers Authority bondholders are still pending. The balance will depend on the coordination between the Board and the government.
Transparency and leadership should lead Puerto Rico to speed up structural reforms that stabilize governance. Reforms must begin with the redesign of the Governor's circle of trust. A wise selection of officials and the proper balance in distributing the roles are key to sound and efficient administration.
Appointing just one person to several high-level positions, which are critical for the island’s recovery and development, represents a challenge to the mission of efficiency. The dismissal of Raúl Maldonado, regardless of the circumstances, emphasizes the vulnerability involved in consolidating the leadership of three vital roles: the heads of the Treasury, the Office of Management and Budget, and the main financial advisor to the government. This crisis broke out in the middle of the budget debate.
The governor brings a solution that repeats the same strategy, one official is concentrating different key positions, in this case, Christian Sobrino, who also leads the Fiscal Agency and Financial Advisory Authority, and is the government's representative to the Board. Regardless of his merits, Sobrino has too many responsibilities on his shoulders.
Government restructuring should bring clear accountability from all officials. Along with this, the business sector has proposed mechanisms such us digital bidding platforms to make procurement processes transparent. They also recommend adopting internationally validated systems to prevent corruption, bribery, and extortion, among others.
Amid official investigations on several government agencies and the legislative branch, recent events have hurt the efforts made both here and abroad by the private sector and Resident Commissioner Jenniffer González to promote the island's competitiveness and the release of reconstruction funds.
Along with them, the other components of the government and sectors of the island have to prevent Puerto Rico from suffering another economic downturn without having restructured its debt. We should not miss this precious opportunity to attract investment partners and to receive the funds already approved by the federal government to put our solid development on track.