Puerto Rico Warning: You are not logged in. Your IP address will be publicly visible if you make any edits. If you log in or create an account, your edits will be attributed to your username, along with other benefits.Anti-spam check. Do not fill this in! ==Economy== {{Main|Economy of Puerto Rico|Puerto Rico government-debt crisis}} [[File:GDP_per_capita_development_in_Puerto_Rico.svg|thumb|300px|right|Real [[Gross domestic product|GDP]] per capita development of Puerto Rico]] Puerto Rico is classified as a [[high income economy]] by the [[World Bank]] and [[International Monetary Fund]].<ref name="Advanced economies" /> It is considered the most competitive economy in [[Latin America]] by the [[World Economic Forum]] and ranks highly on the [[Human Development Index]]. According to [[World Bank]], [[gross national income]] per capita in Puerto Rico in 2020 was $21,740.<ref>{{Cite web|title=GNI per capita, Atlas method (current US$) - Puerto Rico {{!}} Data|url=https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=PR|access-date=2021-12-12|website=data.worldbank.org|archive-date=12 December 2021|archive-url=https://web.archive.org/web/20211212054854/https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=PR|url-status=live}}</ref> Puerto Rico's economy is mainly driven by [[Manufacturing in Puerto Rico|manufacturing]] (primarily pharmaceuticals, textiles, petrochemicals and electronics) followed by services (primarily finance, insurance, [[real estate in Puerto Rico|real estate]] and [[tourism in Puerto Rico|tourism]]); agriculture represents less than 1% of GNP.<ref>{{cite web|title=PUERTO RICO FACT SHEET|url=http://www.gdb-pur.com/economy/documents/PREconomicFactSheet-March2016.pdf|archive-url=https://web.archive.org/web/20170525013719/http://www.gdb-pur.com/economy/documents/PREconomicFactSheet-March2016.pdf|archive-date=25 May 2017|access-date=26 August 2017|website=Gdb-pur.com}}</ref>{{efn|pr.gov (in Spanish) "La manufactura es el sector principal de la economía de Puerto Rico."<ref name="manufacturing-by-pr.gov"/>}}{{efn|pr.gov (in Spanish) "Algunas de las industrias más destacadas dentro del sector de la manufactura son: las farmacéuticas, los textiles, los petroquímicos, las computadoras, la electrónica y las compañías dedicadas a la manufactura de instrumentos médicos y científicos, entre otros."<ref name="manufacturing-by-pr.gov" />}} In recent years, it has also become a popular destination for MICE ([[meetings, incentives, conferencing, exhibitions]]), with a modern [[Isla Verde, Puerto Rico|convention center district]] overlooking the [[Port of San Juan]].<ref>{{cite web |url=http://www.businessdestinations.com/destinations/puerto-ricos-tourism-industry-continues-to-expand/ |title=Puerto Rico's tourism industry continues to expand |work=Business Destinations |access-date=27 April 2017 |archive-date=28 April 2017 |archive-url=https://web.archive.org/web/20170428053343/http://www.businessdestinations.com/destinations/puerto-ricos-tourism-industry-continues-to-expand/ |url-status=live }}</ref> Responsibility for San Juan [[port]] inspections lies with [[Plant Protection and Quarantine|PPQ]].<ref name="Interceptions" /> So high is the volume of [[cargo]] traffic that between 1984{{endash}}2000 the San Juan PPQ station recorded 7.74% of all [[pest surveillance|interceptions]], #4 in the country, #2 for insects and #3 for [[agricultural pathogen|pathogens]].<ref name="Interceptions" /> Most species are originally from [[South America]] or elsewhere in the [[Caribbean]] due to PR's position as an intermediary on the way to the mainland.<ref name="Interceptions" /> This is one of the worst locations for [[cut flowers]] and other plant parts {{endash}} both in terms of number of problems and diversity of species {{endash}} for insects in plant parts in [[baggage]], and for pathogens in plant parts in baggage and cargo.<ref name="Interceptions" /> Pathogen interceptions were dramatically (17%) higher 1999{{endash}}2000 than in 1985{{endash}}1986.<ref name="Interceptions">{{Unbulleted list citebundle |{{*}} {{cite journal | date=2006 | publisher=[[Springer Publishing|Springer]] | first5=David | pages=611–630 | title=Interceptions of nonindigenous plant pests at US ports of entry and border crossings over a 17-year period | first1=Deborah G. | last1=McCullough | first2=Timothy T. | last2=Work | first3=Joseph F. | last3=Cavey | first4=Andrew M. | last4=Liebhold | last5=Marshall | journal=[[Biological Invasions]] | volume=8 | issue=4 | doi=10.1007/s10530-005-1798-4 | bibcode=2006BiInv...8..611M | s2cid=23684940}} |{{*}} {{cite journal | year=2009 | issue=1 | volume=46 | publisher=[[Wiley Publishing]] ([[British Ecological Society]]) | journal=[[Journal of Applied Ecology]] | issn=0021-8901 | last=Hulme | first=Philip E. | title=Trade, transport and trouble: managing invasive species pathways in an era of globalization | doi=10.1111/j.1365-2664.2008.01600.x | pages=10–18 | bibcode=2009JApEc..46...10H | s2cid=1620024| doi-access=free }} |{{*}} {{cite journal | date=2016 | issue=1 | volume=7 | publisher=[[Nature Portfolio]] | journal=[[Nature Communications]] | issn=2041-1723 | first3=Jeffrey S. | last1=Early | first1=Regan | last2=Bradley | first2=Bethany A. | last3=Dukes | last4=Lawler | first4=Joshua J. | last5=Olden | first5=Julian D. | last6=Blumenthal | first6=Dana M. | last7=Gonzalez | first7=Patrick | last8=Grosholz | first8=Edwin D. | last9=Ibañez | first9=Ines | last10=Miller | first10=Luke P. | last11=Sorte | first11=Cascade J. B. | last12=Tatem | first12=Andrew J. | title=Global threats from invasive alien species in the twenty-first century and national response capacities | page=12485 | doi=10.1038/ncomms12485 | s2cid=1053793 | pmid=27549569 | pmc=4996970| bibcode=2016NatCo...712485E }} |{{*}} {{cite journal | date=2014 | issue=1 | publisher=[[Annual Reviews (publisher)|Annual Reviews]] | volume=59 | pages=13–30 | journal=[[Annual Review of Entomology]] | issn=0066-4170 | last1=Herms | first1=Daniel A. | last2=McCullough | first2=Deborah G. | title=Emerald Ash Borer Invasion of North America: History, Biology, Ecology, Impacts, and Management | doi=10.1146/annurev-ento-011613-162051 | s2cid=207608918 | pmid=24112110| doi-access=free }} |{{*}} {{cite journal | date=2008 | issue=1 | publisher=[[Annual Reviews (publisher)|Annual Reviews]] | volume=53 | journal=[[Annual Review of Entomology]] | issn=0066-4170 | last1=Liebhold | first1=Andrew M. | last2=Tobin | first2=Patrick C. | title=Population Ecology of Insect Invasions and Their Management | doi=10.1146/annurev.ento.52.110405.091401 | pages=387–408 | s2cid=11688227 | pmid=17877456}} |{{*}} {{cite journal | date=2012 | issue=3 | volume=10 | publisher=[[Wiley Publishing]] ([[Ecological Society of America]]) | journal=[[Frontiers in Ecology and the Environment]] | issn=1540-9295 | last1=Liebhold | first1=Andrew M | last2=Brockerhoff | first2=Eckehard G | last3=Garrett | first3=Lynn J | last4=Parke | first4=Jennifer L | last5=Britton | first5=Kerry O | title=Live plant imports: the major pathway for forest insect and pathogen invasions of the US | doi=10.1890/110198 | pages=135–143 | bibcode=2012FrEE...10..135L | s2cid=86218354}} |{{*}} {{cite journal | year=2010 | volume=60 | issue=11 | publisher=[[Oxford University Press]] ([[American Institute of Biological Sciences]]) | journal=[[BioScience]] | issn=1525-3244 | first3=Betsy | pages=886–897 | last1=Aukema | first1=Juliann E. | last2=McCullough | first2=Deborah G. | last3=Von Holle | last4=Liebhold | first4=Andrew M. | last5=Britton | first5=Kerry | last6=Frankel | first6=Susan J. | title=Historical Accumulation of Nonindigenous Forest Pests in the Continental United States | doi=10.1525/bio.2010.60.11.5 | s2cid=28154739}} |{{*}} {{cite journal | date=2021 | volume=31 | issue=7 | last6=James | publisher=[[Wiley Publishing]] ([[Ecological Society of America]]) | journal=[[Ecological Applications]] | issn=1051-0761 | last1=Turner | first1=Rebecca M. | last2=Brockerhoff | first2=Eckehard G. | last3=Bertelsmeier | first3=Cleo | last4=Blake | first4=Rachael E. | last5=Caton | first5=Barney | first6=Alex | last7=MacLeod | first7=Alan | last8=Nahrung | first8=Helen F. | last9=Pawson | first9=Stephen M. | last10=Plank | first10=Michael J. | last11=Pureswaran | first11=Deepa S. | last12=Seebens | first12=Hanno | last13=Yamanaka | first13=Takehiko | last14=Liebhold | first14=Andrew M. | title=Worldwide border interceptions provide a window into human-mediated global insect movement | pages=e02412 | doi=10.1002/eap.2412 | s2cid=235809250 | pmid=34255404 | bibcode=2021EcoAp..31E2412T | url=https://www.dora.lib4ri.ch/wsl/islandora/object/wsl%3A28309 | access-date=28 September 2022 | archive-date=22 October 2022 | archive-url=https://web.archive.org/web/20221022013917/https://www.dora.lib4ri.ch/wsl/islandora/object/wsl:28309 | url-status=live }} }}</ref> [[geography of Puerto Rico|Puerto Rico's geography]] and [[political status of Puerto Rico|political status]] are both determining factors for its economic prosperity, primarily due to its relatively small size; [[Natural resource economics|lack of natural resources]] and subsequent dependence on [[import]]s; and vulnerability to U.S. [[foreign policy]] and trading restrictions, particularly concerning [[transportation in Puerto Rico|its shipping industry]]. Puerto Rico experienced a recession from 2006 to 2011, interrupted by four quarters of economic growth, and entered into recession again in 2013, following growing fiscal imbalance and the expiration of the IRS Section 936 corporate incentives that the [[Internal Revenue Code|U.S. Internal Revenue Code]] had applied to Puerto Rico. This IRS section was critical to the economy, as it established [[tax exemption]]s for U.S. corporations that settled in Puerto Rico and allowed their insular subsidiaries to send their earnings to the parent corporation at any time, without paying federal tax on corporate income. Puerto Rico has been able to maintain a relatively low inflation in the past decade while maintaining a [[purchasing power parity]] per capita higher than 80% of the rest of the world.<ref>[[Alan Heston]], [[Robert Summers]] and Bettina Aten, [https://web.archive.org/web/20120822040945/http://pwt.econ.upenn.edu/php_site/pwt71/pwt71_form.php Penn World Table Version 7.1], Center for International Comparisons of Production, Income and Prices at the [[University of Pennsylvania]], July 2012. Accessed on 19 August 2012. Note: GDP per capita data are "PPP Converted GDP Per Capita, average GEKS-CPDW, at current prices (in I$)", labeled as variable "cgdp2".</ref> [[File:Puerto-rico-gdp-by-sector.png|thumb|upright=1.6|Puerto Rico's [[Gross domestic product|GDP]] by [[economic sector]]]] Academically, most of Puerto Rico's economic woes stem from federal regulations that expired, have been repealed, or no longer apply to Puerto Rico; its inability to become self-sufficient and self-sustainable throughout history;{{efn|Torrech San Inocencio (2011; in Spanish) "Con los más de $1,500 millones anuales que recibimos en asistencia federal para alimentos podríamos desarrollar una industria alimentaria autosuficiente en Puerto Rico."<ref>{{cite news |url=http://www.elnuevodia.com/voz-titulo-1137663.html |title=La autosuficiencia alimentaria |first=Rafael |last=Torrcech San Inocencio |date=7 December 2011 |access-date=19 September 2013 |language=es |newspaper=[[El Nuevo Día]] |archive-url=https://web.archive.org/web/20131106153646/http://www.elnuevodia.com/voz-titulo-1137663.html |archive-date=6 November 2013 }}</ref>}} its highly politicized public policy which tends to change [[political party strength in Puerto Rico|whenever a political party gains power]];{{efn|Millán Rodriguez (2013; in Spanish) "Los representantes del Pueblo en la Junta de Gobierno de la Autoridad de Energía Eléctrica [...] denunciaron ayer que la propuesta del Gobernador para hacer cambios en la composición del organismo institucionaliza la intervención político partidista en la corporación pública y la convierte en una agencia del Ejecutivo.."<ref>{{cite news |url=http://www.vocero.com/denuncian-politizacion-de-junta-aee/ |title=Denuncian politización de Junta AEE |first=Yamilet |last=Millán Rodríguez |newspaper=[[El Vocero]] |date=4 April 2013 |access-date=19 September 2013 |language=es |archive-url=https://web.archive.org/web/20131104002045/http://www.vocero.com/denuncian-politizacion-de-junta-aee/ |archive-date=4 November 2013 }}</ref>}} as well as [[government of Puerto Rico|its highly inefficient local government]]{{efn|Vera Rosa (2013; in Spanish) "Aunque Puerto Rico mueve entre el sector público y privado $15 billones en el área de salud, las deficiencias en el sistema todavía no alcanzan un nivel de eficiencia óptimo."<ref name="el-vocero-inefficient-health-2013">{{cite news |url=http://www.vocero.com/ineficiencia-arropa-a-los-recursos-economicos-de-salud/ |title=Ineficiencia arropa a los recursos económicos de salud |date=17 May 2013 |access-date=19 September 2013 |language=es |newspaper=[[El Vocero]] |first=Ileanexis |last=Vera Rosado |archive-url=https://web.archive.org/web/20131104000540/http://www.vocero.com/ineficiencia-arropa-a-los-recursos-economicos-de-salud/ |archive-date=4 November 2013 }}</ref>}}{{efn|Vera Rosado (2013; in Spanish) "Para mejorar la calidad de servicio, que se impacta principalmente por deficiencias administrativas y no por falta de dinero[...]"<ref name="el-vocero-inefficient-health-2013" />}} which has accrued a [[public debt of Puerto Rico|public debt]] equal to 68% of its [[gross domestic product]] throughout time.{{efn|González (2012; in Spanish) "[...] al analizarse la deuda pública de la Isla contra el Producto Interno Bruto (PIB), se ubicaría en una relación deuda/PIB de 68% aproximadamente."<ref>{{cite news |url=http://www.elnuevodia.com/debemosmasdeloqueproducimos-1278143.html |title=Debemos más de lo que producimos |first=Jenisabel |last=González |date=13 June 2012 |access-date=19 September 2013 |language=es |newspaper=[[El Nuevo Día]] |archive-url=https://web.archive.org/web/20131106153626/http://www.elnuevodia.com/debemosmasdeloqueproducimos-1278143.html |archive-date=6 November 2013 }}</ref>}}{{efn|Bauzá (2013; in Spanish) "La realidad de nuestra situación económica y fiscal es resultado de años de falta de acción. Al Gobierno le faltó creatividad, innovación y rapidez en la creación de un nuevo modelo económico que sustentara nuestra economía. Tras la eliminación de la Sección 936, debimos ser proactivos, y no lo fuimos."<ref>{{cite news |url=http://www.elnuevodia.com/garciapadillainsisteenqueheredounpaisencantos-1657317.html |title=García Padilla insiste en que heredó un país "en cantos" |first=Nydia |last=Bauzá |newspaper=[[El Nuevo Día]] |date=2 December 2013 |access-date=2 December 2013 |language=es |archive-date=4 December 2013 |archive-url=https://web.archive.org/web/20131204214520/http://www.elnuevodia.com/garciapadillainsisteenqueheredounpaisencantos-1657317.html }}</ref>}} Puerto Rico currently has a public debt of $72.204 billion (equivalent to 103% of GNP), and a government deficit of $2.5 billion.<ref>{{cite web|author1=World Bank Indicators|author2=World Bank|title=World Bank Indicators 2012: Puerto Rico|url=http://data.worldbank.org/country/puerto-rico|access-date=5 February 2012|archive-date=15 February 2020|archive-url=https://web.archive.org/web/20200215065629/https://data.worldbank.org/country/puerto-rico|url-status=live}}</ref><ref name="wef-gcr-2013">{{cite web|last=Schwab|first=Klaus|year=2013|title=The Global Competitiveness Report 2013–2014|url=http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf|access-date=7 September 2013|publisher=[[World Economic Forum]]|archive-date=20 September 2018|archive-url=https://web.archive.org/web/20180920154137/http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf|url-status=live}}</ref> By American standards, Puerto Rico is underdeveloped: It is poorer than Mississippi, the poorest state of the U.S., with 41% of its population below the [[poverty threshold|poverty line]].{{efn|Quintero (2013; in Spanish) "Los indicadores de una economía débil son muchos, y la economía en Puerto Rico está sumamente debilitada, según lo evidencian la tasa de desempleo (13.5%), los altos niveles de pobreza (41.7%), los altos niveles de quiebra y la pérdida poblacional."<ref>{{cite news |url=http://www.noticel.com/noticia/148055/las-estadisticas-hablan-puerto-rico-camino-a-ser-el-detroit-del-caribe.html |title=Las estadísticas hablan: Puerto Rico camino a ser el "Detroit del Caribe" |first=Laura |last=Quintero |date=14 September 2013 |access-date=22 January 2014 |language=es |newspaper=[[NotiCel]] |archive-url=https://web.archive.org/web/20140201150906/http://www.noticel.com/noticia/148055/las-estadisticas-hablan-puerto-rico-camino-a-ser-el-detroit-del-caribe.html |archive-date=1 February 2014 }}</ref>}} However, it has the highest [[Gross domestic product|GDP]] per capita in Latin America. Puerto Rico's main trading partners are the United States, [[Republic of Ireland|Ireland]], and [[Japan]], with most products coming from [[East Asia]], mainly [[China]], [[Hong Kong]], and [[Taiwan]]. Puerto Rico's dependency on oil for [[transportation in Puerto Rico|transportation]] and electricity generation, as well as its dependency on food imports and raw materials, makes Puerto Rico volatile and highly reactive to changes in [[global economy|the world economy]] and [[climate]]. === Tourism === [[File:Beach in Coto, Isabela, Puerto Rico.jpg|thumb|Beach in Coto, [[Isabela, Puerto Rico|Isabela]]]] {{Main|Tourism in Puerto Rico}} [[Tourism in Puerto Rico]] is also an important part of the economy. In 2017, [[Hurricane Maria]] caused severe damage to the island and its infrastructure, disrupting tourism for many months. The damage was estimated at $100 billion. An April 2019 report indicated that by that time, only a few hotels were still closed, that life for tourists in and around the capital had, for the most part, returned to normal.<ref>{{cite web |url=https://www.usatoday.com/story/travel/news/2019/04/02/puerto-rico-breaks-tourism-record-while-rebuilding-hurricane-maria/3346139002/ |title=Nearly two years after Hurricane Maria devastation, Puerto Rico welcomes record number of tourists |date=2 April 2019 |publisher=USA Today |access-date=27 November 2019 |quote=Brief power outages still hit occasionally as the government prepares to privatize an aging and poorly maintained grid that was destroyed by the hurricane, and water shortages have hit parts of Puerto Rico's north coast since 30 percent of the island is experiencing a moderate drought that is affecting 791,000 of its 3.2 million inhabitants. |archive-date=27 November 2019 |archive-url=https://web.archive.org/web/20191127164315/https://www.usatoday.com/story/travel/news/2019/04/02/puerto-rico-breaks-tourism-record-while-rebuilding-hurricane-maria/3346139002/ |url-status=live }}</ref> By October 2019, nearly all of the popular amenities for tourists, in the major destinations such as San Juan, Ponce and Arecibo, were in operation on the island and tourism was rebounding. This was important for the economy, since tourism provides up to 10% of Puerto Rico's GDP, according to Discover Puerto Rico.<ref>{{cite web |url=https://www.viahero.com/travel-to-puerto-rico/puerto-rico-tourism-update |title=Nearly two years after Hurricane Maria devastation, Puerto Rico welcomes record number of tourists |date=2 April 2019 |publisher=ViaHero |access-date=16 October 2019 |quote=Almost all of Puerto Rico's hotels are open for business. The beaches are ready for swimming and sunbathing, and even remote places to visit like El Yunque rainforest are receiving visitors. |archive-date=27 November 2019 |archive-url=https://web.archive.org/web/20191127164436/https://www.viahero.com/travel-to-puerto-rico/puerto-rico-tourism-update |url-status=live }}</ref> A tourism campaign was launched by Discover Puerto Rico in 2018 intended to highlight the island's culture and history, branding it distinct, and different from other Caribbean destinations. In 2019, Discover Puerto Rico planned to continue that campaign.<ref>{{cite web |url=https://skift.com/2019/04/24/culture-is-central-in-puerto-ricos-new-marketing-campaign/ |title=Culture Is Central in Puerto Rico's New Marketing Campaign |date=24 April 2019 |publisher=Skift |access-date=27 November 2019 |archive-date=27 November 2019 |archive-url=https://web.archive.org/web/20191127164352/https://skift.com/2019/04/24/culture-is-central-in-puerto-ricos-new-marketing-campaign/ |url-status=live }}</ref> === Fiscal debt === In early 2017, the [[Puerto Rican government-debt crisis]] posed serious problems for the government which was saddled with outstanding bond debt that had climbed to $70 billion.<ref>{{cite news |url=http://www.thefiscaltimes.com/latestnews/2017/01/18/Puerto-Rico-oversight-board-favors-more-time-restructuring-talks |title=Puerto Rico oversight board favors more time for restructuring talks |author=Nick Brown |agency=Reuters |date=18 January 2017 |work=The Fiscal Times |access-date=16 February 2017 |archive-date=17 February 2017 |archive-url=https://web.archive.org/web/20170217145557/http://www.thefiscaltimes.com/latestnews/2017/01/18/Puerto-Rico-oversight-board-favors-more-time-restructuring-talks |url-status=live }}</ref> The debt had been increasing during a decade-long recession.<ref name="auto">{{cite news|url=http://www.starherald.com/news/nation_world/puerto-rico-gets-more-time-to-propose-fiscal-plan/article_b805f0e6-f333-5d33-8d94-d29a610d820a.html|title=Puerto Rico Gets More Time|date=29 January 2017|newspaper=Star Herald|access-date=16 February 2017|agency=Associated Press|location=Scottsbluff, ME}}{{dead link|date=May 2017|bot=InternetArchiveBot|fix-attempted=yes}}</ref> The Commonwealth had been defaulting on many debts, including bonds, since 2015. With debt payments due, the governor was facing the risk of a government shutdown and failure to fund the managed health care system.<ref>{{cite news |last=Platt |first=Eric |date=19 January 2017 |title=New Puerto Rico governor seeks amicable debt crisis resolution |url=https://www.ft.com/content/d9551584-de66-11e6-86ac-f253db7791c6 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/d9551584-de66-11e6-86ac-f253db7791c6 |archive-date=10 December 2022 |url-access=subscription |newspaper=Financial Times |location=New York |access-date=17 February 2017}}</ref><ref name="Watson">{{cite web |url=https://www.treasury.gov/connect/blog/Pages/Secretary-Lew-Sends-Letter-to-115th-Congress-on-Puerto-Rico.aspx |title=Secretary Lew Sends Letter to 115th Congress on Puerto Rico |last=Watson |first=Dan |date=17 January 2017 |website=Department of the Treasury |access-date=16 February 2017 |archive-date=17 February 2017 |archive-url=https://web.archive.org/web/20170217062856/https://www.treasury.gov/connect/blog/Pages/Secretary-Lew-Sends-Letter-to-115th-Congress-on-Puerto-Rico.aspx |url-status=live }}</ref> "Without action before April, Puerto Rico's ability to execute contracts for Fiscal Year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens living in Puerto Rico", according to a letter sent to Congress by the Secretary of the Treasury and the Secretary of Health and Human Services. They also said that "Congress must enact measures recommended by both Republicans and Democrats that fix Puerto Rico's inequitable health care financing structure and promote sustained economic growth."<ref name="Watson"/> Initially, the oversight board created under [[PROMESA]] called for Puerto Rico's governor [[Ricardo Rosselló]] to deliver a fiscal turnaround plan by 28 January. Just before that deadline, the control board gave the Commonwealth government until 28 February to present a fiscal plan (including negotiations with creditors for restructuring debt) to solve the problems. A moratorium on lawsuits by debtors was extended to 31 May.<ref name="auto"/> It is essential for Puerto Rico to reach restructuring deals to avoid a bankruptcy-like process under [[PROMESA]].<ref>{{cite news |url=http://www.thefiscaltimes.com/latestnews/2017/01/18/Puerto-Rico-oversight-board-favors-more-time-restructuring-talks |title=Puerto Rico oversight board favors more time for restructuring talks |author=Nick Brown |agency=Reuters |date=18 January 2017 |work=The Fiscal Times |access-date=16 February 2017 |quote=The bipartisan, seven-member oversight board was created under the federal Puerto Rico rescue law known as PROMESA, passed by the U.S. Congress last year. It is charged with helping the island manage its finances and navigate its way out of the economic jam, including by negotiating restructuring deals with creditors. |archive-date=17 February 2017 |archive-url=https://web.archive.org/web/20170217145557/http://www.thefiscaltimes.com/latestnews/2017/01/18/Puerto-Rico-oversight-board-favors-more-time-restructuring-talks |url-status=live }}</ref> An internal survey conducted by the Puerto Rican Economists Association revealed that the majority of Puerto Rican economists reject the policy recommendations of the Board and the Rosselló government, with more than 80% of economists arguing in favor of auditing the debt.<ref>{{cite news |title=Economistas se Oponen a las Reformas para 'estimular la economía' |newspaper=El Nuevo Día |date=20 February 2017}}</ref> In early August 2017, the island's financial oversight board (created by PROMESA) planned to institute two days off without pay per month for government employees, down from the original plan of four days per month; the latter had been expected to achieve $218 million in savings. Governor Rossello rejected this plan as unjustified and unnecessary. Pension reforms were also discussed including a proposal for a 10% reduction in benefits to begin addressing the $50 billion in unfunded pension liabilities.<ref>{{cite web |url=https://www.cnbc.com/2017/08/04/reuters-america-puerto-rico-to-furlough-workers-proposes-pension-plan-reform.html |title=Puerto Rico to furlough workers, proposes pension plan reform |first=Daniel |last=Bases |date=4 August 2017 |website=Cnbc.com |access-date=26 August 2017 |archive-url=https://web.archive.org/web/20170806222116/https://www.cnbc.com/2017/08/04/reuters-america-puerto-rico-to-furlough-workers-proposes-pension-plan-reform.html |archive-date=6 August 2017 }}</ref> ===Public finances=== {{main|Puerto Rico government-debt crisis|Budget of the Government of Puerto Rico|public debt of Puerto Rico}} Puerto Rico has an [[operating budget]] of about U.S.$9.8 billion with expenses at about $10.4 billion, creating a structural deficit of $775 million (about 7.9% of the budget).<ref name="el-vocero-la-estadidad-es-uniforme">{{cite news |url=http://elvocero.com/la-estadidad-es-una-unica-uniforme-e-irreversible/ |title=La Estadidad es una, única, uniforme e irreversible |first=José |last=Castrodad |newspaper=[[El Vocero]] |date=7 April 2014 |access-date=8 April 2014 |archive-url=https://web.archive.org/web/20140409052840/http://elvocero.com/la-estadidad-es-una-unica-uniforme-e-irreversible/ |archive-date=9 April 2014 }}</ref> The practice of approving budgets with a structural deficit has been done for {{years ago|2000}} consecutive years starting in 2000. Throughout those years, including present time, all budgets contemplated issuing bonds to cover these projected deficits rather than making structural adjustments. This practice increased Puerto Rico's cumulative debt, as the government had already been issuing bonds [[Puerto Rico government budget balance|to balance its actual budget]] for four decades beginning in 1973.{{efn|Walsh (2013) "In each of the last six years, Puerto Rico sold hundreds of millions of dollars of new bonds just to meet payments on its older, outstanding bonds – a red flag. It also sold $2.5 billion worth of bonds to raise cash for its troubled pension system – a risky practice – and it sold still more long-term bonds to cover its yearly budget deficits."<ref>{{cite news |url=https://dealbook.nytimes.com/2013/10/07/worsening-debt-crisis-threatens-puerto-rico/ |title=Worsening Debt Crisis Threatens Puerto Rico |first=Mary |last=Walsh |newspaper=[[The New York Times]] |date=7 October 2013 |access-date=8 October 2013 |archive-date=2 November 2013 |archive-url=https://web.archive.org/web/20131102003355/http://dealbook.nytimes.com/2013/10/07/worsening-debt-crisis-threatens-puerto-rico/ |url-status=live }}</ref>}}<ref>{{cite news |url=http://www.elnuevodia.com/comopuertoricollegoatenercreditochatarra-1704621.html |title=¿Cómo Puerto Rico llegó a tener crédito chatarra? |newspaper=[[El Nuevo Día]] |date=4 February 2014 |access-date=2 March 2014 |language=es |archive-date=2 March 2014 |archive-url=https://web.archive.org/web/20140302003237/http://www.elnuevodia.com/comopuertoricollegoatenercreditochatarra-1704621.html }}</ref> [[File:Budget-of-the-government-of-puerto-rico-2012-percentage.png|thumb|upright=1.8|The 2012 Budget of the government of Puerto Rico]] Projected deficits added substantial burdens to an already indebted nation which accrued [[Public debt of Puerto Rico|a public debt]] of $71B or about 70% of Puerto Rico's gross domestic product. This sparked [[Puerto Rico government-debt crisis|an ongoing government-debt crisis]] after Puerto Rico's general obligation bonds were downgraded to speculative non-investment grade ("junk status") by three credit-rating agencies. In terms of financial control, almost 9.6%—or about $1.5 billion—of Puerto Rico's central government budget expenses for FY2014 is expected to be spent on debt service.{{efn|PRGDB "Financial Information and Operating Data Report to 18 October 2013" p. 142<ref name="gdb-report-2013">{{cite web |url=http://www.gdb-pur.com/spa/documents/commonwealthreport.pdf |title=Financial Information and Operating Data Report to October 18, 2013 |publisher=[[Puerto Rico Government Development Bank]] |date=18 October 2013 |access-date=4 March 2014 |archive-url=https://web.archive.org/web/20140422202646/http://www.gdb-pur.com/spa/documents/commonwealthreport.pdf |archive-date=22 April 2014 }}</ref>}} Harsher budget cuts are expected as Puerto Rico must now repay larger chunks of debts in the coming years.{{update inline|date=July 2016}} For practical reasons the budget is divided into two aspects: a "general budget" which comprises the assignments funded exclusively by the [[Department of Treasury of Puerto Rico]], and the "consolidated budget" which comprises the assignments funded by the general budget, by [[List of government-owned corporations of Puerto Rico|Puerto Rico's government-owned corporations]], by revenue expected from loans, by the sale of government bonds, by subsidies extended by the [[federal government of the United States]], and by other funds. Both budgets contrast each other drastically, with the consolidated budget being usually thrice the size of the general budget; currently $29B and $9.0B respectively. Almost one out of every four dollars in the consolidated budget comes from U.S. federal subsidies while government-owned corporations compose more than 31% of the consolidated budget. The critical aspects come from the sale of bonds, which comprise 7% of the consolidated budget – a ratio that increased annually due to the government's inability to prepare a balanced budget in addition to being incapable of generating enough income to cover all its expenses. In particular, the government-owned corporations add a heavy burden to the overall budget and public debt, as none is self-sufficient. For example, in FY2011 the government-owned corporations reported aggregated losses of more than $1.3B with the [[Puerto Rico Highways and Transportation Authority]] (PRHTA) reporting losses of $409M, the [[Puerto Rico Electric Power Authority]] (PREPA; the government monopoly that controls all electricity on the island) reporting losses of $272M, while the [[Puerto Rico Aqueducts and Sewers Authority]] (PRASA; the government monopoly that controls all water utilities on the island) reported losses of $112M.<ref>{{cite web |url=http://grupocne.org/2013/01/31/san-juan-2023-o-la-decadencia-de-un-pais/ |title=San Juan 2023 o la decadencia de un País |work=Centro Para Una Nueva Economía |publisher=Center for a New Economy |date=31 January 2013 |access-date=28 April 2014 |archive-date=29 April 2014 |archive-url=https://web.archive.org/web/20140429045551/http://grupocne.org/2013/01/31/san-juan-2023-o-la-decadencia-de-un-pais/ |url-status=live }}</ref> Losses by government-owned corporations have been defrayed through the issuance of bonds compounding more than 40% of Puerto Rico's entire public debt today.<ref>{{cite web |url=http://www2.pr.gov/presupuestos/presupuesto2011-2012/Resumen%20del%20Presupuesto/Servicio%20de%20la%20Deuda.pdf |title=SERVICIO DE LA DEUDA |website=".pr.gov |access-date=26 August 2017 |archive-url=https://web.archive.org/web/20170525014050/http://www2.pr.gov/presupuestos/presupuesto2011-2012/Resumen%20del%20Presupuesto/Servicio%20de%20la%20Deuda.pdf |archive-date=25 May 2017 }}</ref> Holistically, from FY2000–FY2010 Puerto Rico's debt grew at a [[compound annual growth rate]] (CAGR) of 9% while GDP remained stagnant.<ref>{{cite web |url=http://gdbpr.com/spa/investors_resources/documents/2011-07-12-DeudaPublicaDic2010-GS.pdf |title=Reporte General sobre Deuda Pública |website=".pr.gov |access-date=26 August 2017 |archive-url=https://web.archive.org/web/20170525013905/http://gdbpr.com/spa/investors_resources/documents/2011-07-12-DeudaPublicaDic2010-GS.pdf |archive-date=25 May 2017 }}</ref> This has not always provided a long-term solution. In early July 2017 for example, the PREPA power authority was effectively bankrupt after defaulting in a plan to restructure $9 billion in bond debt; the agency planned to seek Court protection.<ref>{{cite news |url=https://www.nytimes.com/2017/07/02/business/puerto-ricos-electric-power-authority-effectively-files-for-bankruptcy.html |archive-url=https://web.archive.org/web/20170703030726/https://www.nytimes.com/2017/07/02/business/puerto-ricos-electric-power-authority-effectively-files-for-bankruptcy.html |archive-date=2017-07-03 |url-access=subscription |url-status=live |title=Puerto Rico's Power Authority Effectively Files for Bankruptcy |first=Mary Williams |last=Walsh |date=2 July 2017 |access-date=26 August 2017 |website=[[The New York Times]]}}</ref> In terms of protocol, the governor, together with the [[Puerto Rico Office of Management and Budget]] (OGP in Spanish), formulates the budget he believes is required to operate all government branches for the ensuing fiscal year. He then submits this formulation as a budget request to the Puerto Rican legislature before 1 July, the date established by law as the beginning of Puerto Rico's fiscal year. While the constitution establishes that the request must be submitted "at the beginning of each regular session", the request is typically submitted during the first week of May as the regular sessions of the legislature begin in January and it would be impractical to submit a request so far in advance. Once submitted, the budget is then approved by the legislature, typically with amendments, through a [[joint resolution]] and is referred back to the governor for his approval. The governor then either approves it or vetoes it. If vetoed, the legislature can then either refer it back with amendments for the governor's approval or approve it without the governor's consent by two-thirds of the bodies of each chamber.<ref>{{cite web |url=http://www2.pr.gov/presupuestos/PresupuestoAprobado2013-2014/Informacin%20General/Proceso%20Presupuestario.pdf |title=PROCESO PRESUPUESTARIO |website=2.pr.gov |access-date=26 August 2017 |archive-url=https://web.archive.org/web/20170525014054/http://www2.pr.gov/presupuestos/PresupuestoAprobado2013-2014/Informacin%20General/Proceso%20Presupuestario.pdf |archive-date=25 May 2017 }}</ref> Once the budget is approved, the Department of Treasury disburses funds to the Office of Management and Budget which in turn disburses the funds to the respective agencies, while the [[Puerto Rico Government Development Bank]] (the government's intergovernmental bank) manages all related banking affairs including those related to the government-owned corporations. ===Cost of living=== [[File:Map-of-jones-act-carrier-routes-for-puerto-rico.png|thumb|upright=1.6|A map of the [[Merchant Marine Act of 1920|Jones Act]] merchant marine shipping routes for Puerto Rico|alt=|left]] The [[cost of living]] in Puerto Rico is high and has increased over the past decade.{{efn|MRGI (2008) "Many female migrants leave their families behind due to the risk of illegal travel and the high cost of living in Puerto Rico."<ref name="refworld.org"/>}}<ref>[https://archive.today/20140618035840/http://www.militaryinstallations.dod.mil/pls/psgprod/f?p=132:CONTENT:618940367579001::NO::P4_INST_ID,P4_INST_TYPE:4150,INSTALLATION "Fort Buchanan, Puerto Rico"]. ''Military Installations''. Department of Defense. Retrieved 17 June 2014.</ref><ref>{{cite news |url=https://www.huffingtonpost.com/2013/09/29/puerto-ricos-cost-of-livi_n_4013350.html |title=Puerto Rico's Cost of Living Skyrockets |publisher=Huffingtonpost.com |date=29 September 2013 |access-date=14 April 2014 |archive-url=https://web.archive.org/web/20140313113741/http://www.huffingtonpost.com/2013/09/29/puerto-ricos-cost-of-livi_n_4013350.html |archive-date=13 March 2014 }}</ref><ref>{{cite news |url=https://www.nytimes.com/2014/02/09/us/economy-and-crime-spur-new-puerto-rican-exodus.html?_r=0 |work=The New York Times |first=Lizette |last=Alvarez |title=Economy and Crime Spur New Puerto Rican Exodus |date=8 February 2014}}</ref><ref>{{cite web |url=http://www.elnuevodia.com/sigueenaumentoelcostodevidaenpuertorico-1585599.html |title=Home – El Nuevo Día |publisher=Elnuevodia.com |date=31 August 2013 |access-date=14 April 2014 |archive-url=https://web.archive.org/web/20140208121032/http://www.elnuevodia.com/sigueenaumentoelcostodevidaenpuertorico-1585599.html |archive-date=8 February 2014}}</ref><ref>{{cite web |url=http://www.primerahora.com/noticias/gobierno-politica/nota/midaconcluyealtocostodevidaeslapreocupacionmayordelboricua-399279/ |title=MIDA concluye alto costo de vida es la preocupación mayor del boricua |publisher=Primerahora.com |date=13 February 2013 |access-date=14 April 2014}}</ref><ref>{{cite news |last=Dougherty |first=Conor |url=https://online.wsj.com/news/articles/SB118705864479596908 |title=Puerto Rico's Economic Slump Weighs Hard on Consumers |publisher=Online.wsj.com |date=14 August 2007 |access-date=14 April 2014}}</ref><ref>{{cite web |last=Coto |first=Danica |url=http://nbclatino.com/2013/09/29/life-in-puerto-rico-becomes-costlier-amid-crisis/ |title=Life in Puerto Rico becomes costlier amid crisis |publisher=Nbclatino.com |date=29 September 2013 |access-date=14 April 2014 |archive-date=13 April 2014 |archive-url=https://web.archive.org/web/20140413160122/http://nbclatino.com/2013/09/29/life-in-puerto-rico-becomes-costlier-amid-crisis/ }}</ref> Statistics used for cost of living sometimes do not take into account certain costs, such as the high cost of electricity, which has hovered in the 24¢ to 30¢ range per kilowatt-hour, two to three times the national average, increased travel costs for longer flights, additional shipping fees, and the loss of promotional participation opportunities for customers "outside the continental United States". While some online stores do offer free shipping on orders to Puerto Rico, many merchants exclude Hawaii, Alaska, Puerto Rico and other United States territories. The household median income is stated as $19,350 and the mean income as $30,463 in the U.S. Census Bureau's 2015 update. The report also indicates that 45.5% of individuals are below the poverty level.<ref name="census1">{{cite web |url=https://www.census.gov |title=Puerto Rico 2012–2016 American Community Survey 5-Year Estimates |author=<!--Not stated--> |date=2016 |website=US Census |publisher=Department of Commerce |access-date=25 September 2017 }}</ref> The median home value in Puerto Rico ranges from U.S.$100,000 to U.S.$214,000, while the national median home value sits at $119,600.{{efn|FRBNY (2011) "...home values vary considerably across municipios: for the metro area overall, the median value of owner-occupied homes was estimated at $126,000 (based on data for 2007–09), but these medians ranged from $214,000 in Guaynabo to around $100,000 in some of the outlying municipios. The median value in the San Juan municipio was estimated at $170,000."<ref>{{cite web |url=http://www.newyorkfed.org/regional/profile_puertorico.html |title=Puerto Rico |publisher=[[Federal Reserve Bank of New York]] |date=August 2011 |access-date=6 September 2013}}</ref>}} [[File:Flying into San Juan-Puerto Rico.jpg|thumb|Flying into San Juan]] One of the most cited contributors to the high cost of living in Puerto Rico is the [[Merchant Marine Act of 1920]], also known as the [[Merchant Marine Act of 1920|Jones Act]], which prevents foreign-flagged ships from carrying cargo between two American ports, a practice known as [[cabotage]].<ref name="erg-trade">{{cite web |url=http://graduados.uprrp.edu/planificacion/facultad/elias-gutierrez/ERGTRADE.pdf |title=Impact of the Coastwise Trade Laws on the Transportation System of the United States of America |first=Elías |last=Gutierrez |access-date=6 September 2013 |archive-url=https://web.archive.org/web/20131002122312/http://graduados.uprrp.edu/planificacion/facultad/elias-gutierrez/ERGTRADE.pdf |archive-date=2 October 2013 }}</ref> Because of the Jones Act, foreign ships inbound with goods from [[Central America|Central]] and [[South America]], [[Western Europe]], and [[Africa]] cannot stop in Puerto Rico, offload Puerto Rico-bound goods, load mainland-bound Puerto Rico-manufactured goods, and continue to U.S. ports. Instead, they must proceed directly to U.S. ports, where distributors [[break bulk cargo|break bulk]] and send Puerto Rico-bound manufactured goods to Puerto Rico across the ocean by U.S.-flagged ships.<ref name="erg-trade" /> The [[government of Puerto Rico|local government of Puerto Rico]] has requested several times to the [[U.S. Congress]] to exclude Puerto Rico from the Jones Act restrictions without success.{{efn|Santiago (2021) "Local detractors of the Jones Act [...] for many years have unsuccessfully tried to have Puerto Rico excluded from the law's provisions[...]"<ref>{{cite news |title=Jones Act requirement comes under new light |first=Jaime |last=Santiago |newspaper=[[Caribbean Business]] |url=http://www.caribbeanbusinesspr.com/prnt_ed/news02.php?nw_id=7877&ct_id=0 |date=29 November 2012 |access-date=6 September 2013 |archive-url=https://web.archive.org/web/20140308221156/http://www.caribbeanbusinesspr.com/prnt_ed/news02.php?nw_id=7877&ct_id=0 |archive-date=8 March 2014 }}</ref>}} The most recent measure has been taken by the [[17th Legislative Assembly of Puerto Rico]] through R. Conc. del S. 21.<ref>{{cite web |url=http://www.oslpr.org/files/docs/{A8F2DF0C-A03D-40C7-A198-ED9C945F81C4}.doc |title=R. Conc. del S. 21 |format=[[Microsoft Word]] |publisher=[[Puerto Rico Office of Legislative Services]] |date=6 May 2013 |access-date=6 September 2013 |language=es }}</ref><ref>{{cite news |url=http://www.noticel.com/noticia/141423/senado-aprueba-proyecto-para-pedir-trato-preferencial-en-leyes-de-cabotaje.html |title=Senado aprueba proyecto para pedir trato preferencial en leyes de cabotaje |newspaper=[[NotiCel]] |date=5 June 2013 |access-date=6 September 2013 |language=es |archive-url=https://web.archive.org/web/20131113112757/http://www.noticel.com/noticia/141423/senado-aprueba-proyecto-para-pedir-trato-preferencial-en-leyes-de-cabotaje.html |archive-date=13 November 2013 }}</ref> These measures have always received support from all the [[Political party strength in Puerto Rico|major local political parties]]. In 2013 the [[Government Accountability Office]] published a report which concluded that "repealing or amending the Jones Act cabotage law might cut Puerto Rico shipping costs" and that "shippers believed that opening the trade to non-U.S.-flag competition could lower costs".{{efn|name=joc-gao-report-repeal-quote|JOC (2013) "Repealing or amending the Jones Act cabotage law might cut Puerto Rico shipping costs"<ref name="joc-gao-report"/>}}{{efn|name=joc-gao-report-lower-costs-quote|JOC (2013) "The GAO report said its interviews with shippers indicated they [...] believed that opening the trade to non-U.S.-flag competition could lower costs."<ref name="joc-gao-report" />}} The same GAO report also found that "[shippers] doing business in Puerto Rico that GAO contacted reported that the freight rates are often—although not always—lower for foreign carriers going to and from Puerto Rico and foreign locations than the rates shippers pay to ship similar cargo to and from the United States, despite longer distances. Data were not available to allow us to validate the examples given or verify the extent to which this difference occurred."<ref name="gao-report-pdf">{{cite web |url=http://www.gao.gov/assets/660/653046.pdf |title=GAO-13-260, Puerto Rico: Characteristics of the Island's Maritime Trade and Potential Effects of Modifying the Jones Act |publisher=[[Government Accountability Office|United States Government Accountability Office]] |date=March 2013}}</ref> Ultimately, the report concluded that "[the] effects of modifying the application of the Jones Act for Puerto Rico are highly uncertain" for both Puerto Rico and the United States, particularly for the [[United States Merchant Marine|U.S. shipping industry]] and the military preparedness of the United States.<ref name="joc-gao-report">{{cite news |url=http://www.joc.com/regulation-policy/transportation-regulations/united-states/gao%27s-jones-act-report-inconclusive_20130320.html |title=GAO's Jones Act Report Is Inconclusive |newspaper=[[The Journal of Commerce]] |date=20 March 2013 |access-date=6 September 2013}}{{dead link|date=May 2017 |bot=InternetArchiveBot |fix-attempted=yes }}</ref><ref name="gao-report-pdf" /> A 2018 study by economists at Boston-based Reeve & Associates and Puerto Rico-based Estudios Tecnicos has concluded that the [[Merchant Marine Act of 1920|1920 Jones Act]] has no impact on either retail prices or the cost of livings on Puerto Rico. The study found that Puerto Rico received very similar or lower shipping freight rates when compared to neighboring islands, and that the transportation costs have no impact on retail prices on the island. The study was based in part on actual comparison of consumer goods at retail stores in San Juan, Puerto Rico, and Jacksonville, Florida, finding: no significant difference in the prices of either grocery items or durable goods between the two locations.<ref>{{cite report|url=https://3snn221qaymolkgbj4a0vpey-wpengine.netdna-ssl.com/wp-content/uploads/2018/07/Report_Impact-of-the-Jones-Act-on-Puerto-Rico_FINAL2.pdf|title=Impact of the U.S. Jones Act on Puerto Rico|date=June 2018|author1=Reeve & Associates|author2=Estudios Técnicos, Inc.|access-date=27 August 2018|archive-date=21 January 2021|archive-url=https://web.archive.org/web/20210121210412/https://3snn221qaymolkgbj4a0vpey-wpengine.netdna-ssl.com/wp-content/uploads/2018/07/Report_Impact-of-the-Jones-Act-on-Puerto-Rico_FINAL2.pdf}}</ref> Summary: Please note that all contributions to Christianpedia may be edited, altered, or removed by other contributors. 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