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.
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.