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Yesterday's session was the only one that took place in New York City. (GFR Media)
Yesterday's session was the only one that took place in New York City. (GFR Media)

The mandate that the US Congress gave the Board in order to balance public finances and facilitate Puerto Rico's access to capital markets seems to be hanging by the thread, since the federal tax reform and the impoverishment experienced by the workers on the island threaten the possibility of Puerto Rico returning to a path of economic growth.

Yesterday, although with different perspectives, about a dozen academics, businessmen, union leaders and citizens urged the Board to take concrete actions -both in the federal capital and in Puerto Rico- so that the economy recovers before approving a fiscal plan that bets on austerity again, despite the ravage caused by Hurricane Maria.

However, the recommendations that employers, academics and labor leaders made to the Board are as diverse and complex as the magnitude of the crisis that the federal entity must fight.

"What we are facing is something unprecedented. We are trying to decipher all this," said, in a kind of sigh, the economist and advisor of the Board, Andrew Wolfe, underlining that not all the inputs received by the Board will be part of the fiscal plan.

"It would be silly to say that this is not going to be a difficult task. There's no doubt about that," Wolfe added. He pointed out that he hopes the plan to be approved will "protect" those who must be protected and result in fostering the conditions for a viable economy.

The economist's comments closed the last of the three sessions of dialogue of the Board for the preparation of the fiscal plan that the government must submit on December 22. The Board expects to certify the plan by February 2018.

Yesterday's session was the only one that took place in New York City. There, at the Alexander Hamilton building, Puerto Rico´s businessmen and labor leaders -in what represents a change of position- told the Board they are available to prepare a new fiscal plan.

The session was attended by the president of the Board, José B. Carrión, and the directors Andrew Biggs, Ana Matosantos and Judge Arthur González, as well as its executive director, Natalie Jaresko.

The greatest danger

"While we are here, we face a threat that is much more destructive than anything we have faced in the past, more harmful than (hurricane) María and other natural disasters that Puerto Rico has seen in the last century," said the former director of the Industrial Development Company (PRIDCO), Antonio Medina Comas, in regard to the federal tax reform approved by the federal legislative chambers and which is now before a congressional conference committee that must harmonize the two versions.

"How can the Board comply with the objectives of PROMESA Law if a congressional action that leads to a significant contraction of the economy of Puerto Rico is taken?" Medina Comas asked.

The executive urged the Board to adopt a resolution to support the position of Governor Ricardo Rosselló Nevares on federal tax matters today, during its eleventh public meeting. He also called on the Board to create a multisectoral working group to draw a new development plan for the Island.

Poverty policies

According to academic Hector Cordero Guzmán, who lectures at Baruch College at the City University of New York (CUNY), the Board failed in suggesting an earned income credit (EITC) instead of social assistance programs. The suggestion came up in the summer, when the Board submitted a report in Congress.

In simple terms, according to Cordero Guzmán, the EITC is for people who work and in Puerto Rico the main problem focuses on the dislocation in the labor supply and those who are available to do so.

According to Cordero Guzmán, the information shows that, in Puerto Rico, the increase of participants in charity programs such as the Nutrition Assistance Program (NAP) is directly related to the dislocation of the labor market due to congressional decisions such as the end of section 936.

Cordero Guzmán urged the Board to request parity in assistance programs for the Island, since the mere elimination of marginal benefits will not create more economic activity on the Island.

The approaches of Cordero Guzmán found frustration in Biggs, who argued that the package of marginal benefits that is granted on the Island, in part, explains a gap of up to 20 percent between what a worker in Puerto Rico earns versus the state of Florida

Biggs, who caused acrinomy in the audience by laughing at the speakers' statements, said that the demands for more investments and more money when the Island received millions of debt are unrelated to the need to make profound changes to the economy of the Island. On the contrary, Biggs said, in 20 years Puerto Rico will continue to face the same problems.

Union olive branch

Julie Kushner, director for the 9A region of the United Auto Workers, which includes Puerto Rico, stated that bondholders should not charge a penny until the magnitude of the aid needed by the Island after Hurricane Maria is clearly understood.

Kushner said that the measures adopted by the government to date contributed to the drop in employment in Puerto Rico, with the approval of Law 7 for Fiscal Emergency in 2009 one of the policies that has impoverished workers on the Island.

"What I've seen there (in Puerto Rico) I have not seen in any of the states," Kushner said while criticizing the working conditions on the Island and that middle-class families live with an average annual salary of $ 18,000.

Kushner noted that eliminating benefits such as maternity leave or the Christmas bonus would remove "the small safety net" that workers have on the Island.

"We believe that they have an opportunity, they actually have a choice to make. They have to look at Puerto Rico with a new and fresh look," Kushner told members of the Board. "We want to do that (ask the US for help) with you, not in opposition to you."

"The hurricane probably gave us the opportunity to go to the federal government together and say that there must be real help and recovery in Puerto Rico," Kushner indicated.

Angel Figueroa Jaramillo, president of the Electrical Industry and Irrigation Workers Union (UTIER, Spanish acronym), indicated that, despite "not believing" in a fiscal oversight board, workers should be heard, after "economists and lawyers" contributed, over decades, to the economic and fiscal collapse of the Island.

Jaramillo urged the Board to uproot the partisan policy of the management of the Puerto Rico Electric Power Authority (PREPA) and improve the contracting processes in the corporation, something that will not happen with the appointment of a new trustee by the government.

Roberto Pagán, leader of the Puerto Rican Workers Union, indicated that the probability that the Island will improve economically or that Puerto Ricans will not move to the United States is null if the purchasing power of workers continues to decline.

"Wages and salaries have fallen back to their 2004 levels and continue to decline," assured Pagán.

Less money in your pocket means fewer purchases in businesses that operate on the Island and, in turn, less revenues to cover government operations or the payment of public debt.

Pagán added that substantive investments in infrastructure are the key to the emergence and growth of local companies and to the sustainable development of a society.

"The so-called (labor) reform of January 2017 did not produce new business opportunities, commercial expansion or investments. Instead, the economic situation has worsened," said Pagán, in referring to the laws passed on the issue by the Rosselló Nevares administration.

The business vision

For businessman Federico Stubbe, as well as investment expert Myrna Rivera, Puerto Rico has its own resources to recover, but these need to be coordinated.

Stubbe said that the problems of Puerto Rico came from the lack of representation of the island in Congress, a permit process that prevents development and a terrible projection abroad, even when other cities also face problems of poverty and corruption.

"In our search for help, we only show our ugly face, that of poverty and lack of hope," said Stubbe, who also stated that it would not bother him to compete, provided he was not asked to do so "with one hand tied behind his back."

Meanwhile, for the founder of Consultiva Internacional, Myrna Rivera, Puerto Rico needs to create some 350,000 jobs to recover the path of growth.

To achieve this, Rivera said, a new institutional framework urges, one that, after losing "the moralcompass" in the management of securities and investments on the Island, encourages the fiduciary duty of the entities. This, in turn, will be essential for local investors who lost much of their capital in Puerto Rico instruments to regain confidence in the Island as an investment destination.

According to Rivera, if a well-structured private investment ecosystem is fostered, Puerto Rico could use the remaining capital of Puerto Ricans to promote the investment needed by the Island, an exercise done in various places in the United States and in which they are the investment plans the ones that have invested in the development of the communities.