Sudden and controversial changes in the economic cabinet breed a sense of instability that does not help to the recovery strategy for Puerto Rico.
The government has to guarantee stability and confidence to lead the way into consolidating public finances, which includes the proper implementation of deep structural reforms.
The Department of the Treasury is crucial for this purpose. Its functions include achieving the level of revenues to reach the goals set for fiscal balance, debt obligation restructuring s and the return to investment markets.
Another priority task of the Treasury is to direct the new tax changes, a step towards a reform that will provide efficiency to economic and social incentives, as part of the much-needed tax justice. Its mission is also to fight evasion and ensure efficiency and integrity of its own operations. All this is in harmony with the accountability that taxpayers demand.
The circumstances surrounding the abrupt resignation of Treasury Secretary Teresita Fuentes and her almost immediate replacement, Raúl Maldonado, former head of the Treasury, breed a climate of confusion regarding the vision of public economic policy and its implementation.
Maldonado was also appointed to the Office of Management and Budget (OMB), amid an official investigation into contracts granted while he ran the Department of the Treasury. The authorities are responsible for this investigation to be properly completed.
The points of tension include the role of the government CFO, created through an executive order, in the event of possible clashes with the cabinet powers, such as the Treasury. The Treasury is responsible for tax, liquidity and government accounting work.
The CFO, whose office must be created through legislation, would have certain powers over other agencies heads to intervene in decisions involving procurement, finance and budget departments. His duties should be clear. The governor has appointed Maldonado as director of this structure.
The Executive branch along with the Legislative Assembly should work on the structure that consolidates the Office of Management and Budget in the Treasury. This change comes from the Certified Fiscal Plan approved by the Oversight Board.
According to this Certified Fiscal Plan, the CFO Office must ensure the sound management of the resources of Puerto Rico. It is conceived as part of the centralization of all financial management functions.
The objective of the proposed structure is based on improving fiscal administration, as well as increasing transparency, accountability and internal controls. It is expected to contribute to improving confidence in all the parties interested in the island's finances.
The government has to intensify efforts so that consolidation under the fiscal umbrella operates transparently during the recovery processes.
Although consolidating operations of the Treasury, the OMB integrated with the CFO role poses a high challenge, a specialized team committed to the island´s welfare can help with the projected positive transformations.
Meanwhile, the Executive branch should permanently assess the performance of this new structure and wisely correct deficiencies that hinder compliance with the Certified Fiscal Plan and the island´s recovery agenda.
The fiscal umbrella has a key role in Puerto Rico´s recovery challenge. The change should become the antidote against a budgetary paralysis that led the island to insolvency. Puerto Rico demands professionalism, stability, confidence and transparency in that mission.