As the date nears for governor Ricardo Roselló to submit the first budget of Puerto Rico covered under the federal PROMESA law, we emphasize the great need that the plan to administer the Country’s meager resources be based on accurate revenue forecasts, a spending policy focused on priorities, and a platform of unquestionable transparency.
This weekend the Government will submit to the Oversight Board its revenues and spending forecasts for next fiscal year and they will have to adhere to the criteria set out in the Fiscal Plan certified in March by the Board.
This is a time for difficult yet necessary decisions, and for the unity that all sectors must show, including those in the government, for the urgent goal of clearing the way to restore the Island to financial health.
Support for a balanced budget, as an essential preamble to restructure the debt that prevents the economic development of all, will be the compass that the Country needs to prosper.
It is up to the Legislative Assembly to fulfill the crucial task of allowing the changes the Country requires to avoid the total collapse of its economic activity. The fleeting and obstructionistic political games must give way to reaching for the greater good. Also to avoid adverse effects on the quality of life of civil servants. If the Government is unable to meet the fiscal goals, the federal entity could trigger the contingency mechanisms, such as the elimination of the Christmas bonus for public employees and a reduction of 20% in the work week.
Not less certain is that the task the Government will undertake next to comply with the fiscal goals will require the application of a higher degree of social sensitivity.
The remarks by the representative of governor Ricardo Rosselló to the Board, Elías Sánchez Sifonte, indicate that the operating expenses’ budget for next fiscal year seeks to adequately respond to the government’s commitment to the Fiscal Plan, which was designed to lead the Country toward its mid to long-term recovery.
The budget that the Roselló Administration will submit for initial analysis by the Board this weekend will include, for instance, the merging of agencies and the closing of a still undisclosed number of public schools, for reasons of economy.
The task is more than monumental. With revenues estimated at $8,360 million, the Government will need to identify an additional $924 million to hit the $9,284 million necessary to cover the operating expenses for the fiscal year which starts July 1.
Together with the budget, the Government must submit to the Board its liquidity forecast for next fiscal year and provide details on its plans to implement cutbacks in expenses and the structural changes contained in the Fiscal Plan.
Several recent laws signed by Rosselló will allow the Treasury and the Fiscal Agency and Financial Advisory Authority (FAFAA) to adjust the number of public agencies and corporations.
Elsewhere, the Government continues talks with the bondholders in an effort to reach voluntary agreements before the stay on litigations provided for by PROMESA expires on May 1, while lobbying in Washington in search for the approval of Medicaid funds to avoid the Mi Salud health program from crashing down as early October of this year.
Submission of the budget will practically coincide with the meeting the Board will hold this Friday in New York where its response regarding the fiscal plans of public corporations with serious financial problems is expected.
During these crucial days for the future of Puerto Rico, a cool head must prevail, as well as the confidence that with the cooperation of everyone the fiscal, economic, and social recovery is possible.