Quantcast
Get breaking news alerts via email

Click here to manage your alerts
Fed chief says Puerto Rico needs economic action
Reforms » Decade-long economic slump built $70 billion in debts, 14% unemployment.
First Published Jun 24 2014 06:01 pm • Last Updated Jun 24 2014 06:01 pm

San Juan, Puerto Rico • Puerto Rico’s government needs to move quickly to adopt measures to help pull the island out of a nearly decade-long economic slump, the president of New York’s Federal Reserve Bank said Tuesday.

William Dudley said during a visit to Puerto Rico that the New York Fed is working on a report that will analyze the U.S. territory’s fiscal health. He said Puerto Rico should aim to lower its debt, reform its tax system and strengthen labor market incentives, among other things.

Join the Discussion
Post a Comment

"The next three to six months are very important," he said. "...This is absolutely doable, but you still have to do it."

The recommendations come as the island of 3.7 million people struggles with more than $70 billion in public debt and a 13.8 percent unemployment rate. Its jobless rate is higher than in any U.S. state.

"Low labor participation rates and high unemployment rates remain perhaps the biggest challenges to Puerto Rico’s economy," Dudley said.

Investors are closely watching the island’s fiscal problems, with the government having sold a record $3.5 billion in general obligation bonds in March despite Puerto Rico having its credit rating downgraded to junk status. Legislators are poised to approve the government’s first balanced budget in more than a decade.

Puerto Rico Treasury Secretary Melba Acosta, who attended the conference, declined to comment.

Dudley said Puerto Rico should consider strengthening its public corporations, noting that the state-owned power company, the highway and transportation authority and the water and sewer company account for almost 40 percent of the island’s debt and are to blame for much of its build up.

Comptroller Yesmin Valdivieso said in an interview that public agencies can no longer rely on the general fund like they used to.

"They think the government has a little money-making machine, that the general fund can cover their costs. But not anymore. It’s not possible," she said.


story continues below
story continues below

Dudley said the government also should get energy costs down to help boost the economy. Puerto Rico depends on oil to generate nearly 70 percent of its electricity, and power bills are on average more than twice those on the U.S. mainland.

"Reform on the energy front is absolutely critical," Dudley said.

Gov. Alejandro Garcia Padilla signed a law in May that aims to revamp the power company and increase the use of natural gas and renewable energy sources.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.