Wednesday, August 6, 2014

Puerto Rico: Financial Picture Very Bleak in Commonwealth, "Painful Correction Coming"

According to The Latin American Tribune, the US Department of Justice has allocated $5.4 million for services needed by crime victims in Puerto Rico.

The island’s representative in the US Congress in Washington, Pedro Pierluisi, announced on Tuesday (August 5) in a press release that the funds will go to the Office of Public Security Affairs in Puerto Rico’s Department of Justice.

From Washington the funds will be redistributed amongst organizations that provide services directly to crime victims.

COMMENT: New York's Federal Reserve Bank, according to THE ASSOCIATED PRESS, must correct its financial posture soon or face a "painful adjustment."

It is a fact that the Commonwealth of Puerto Rico has very little transparency in terms of Washington, DC-based funds that are used to prop up the Commonwealth at a time when Puerto Rico is essentially broke, owes creditors $73 billion, has an unemployment rate of 15%, is battling an exodus from the territory and is increasingly dependent upon Washington for supplemental funding.

Worse, Puerto Rico continues to have the highest crime rate in the US and a declining clearance rate by arrest.
  The Commonwealth's credit rating has been downgraded to "junk status."

The federal funds are administered by the US Department of Justice’s Office for Victims of Crime, which provides an annual amount for assistance services for crime victims and survivors of domestic violence, sexual aggression, child abuse, accidents caused by people driving under the influence of alcohol, and homicides, among other crimes.

The services include emergency shelter and security, assistance in obtaining protective injunctions and in filling out applications for compensation, counseling and legal representation.

It should be noted that in President Obama's 2016 federal budget the link below reveals that the President conveniently authorized $2.5 million to conduct an empirical study to determine how many Puerto Ricans support US statehood:

Considering that 75% of Puerto Ricans voted for President Obama in the 2012 election, it stands to reason that the same 75% would predictably vote Democratic in the 2016 presidential bid, providing the Democrats a "win" for the Commonwealth.

Additionally, Puerto Rico has not only the highest unemployment rate in the US (15%), but also has highest homicide rate in the country, second only to Chicago.

After a brief "bump" in 2012, Puerto Rico's economy has stagnated since 2013, the report said. It said the island of 3.6 million people has only a 45% labor force participation rate and has seen a significant decline in population.

Puerto Rico also struggles with a largely uneducated working-age population, although the number of people with a college degree increased from about 25% to nearly 28% between 2010 and 2012.

Analysts recommended Puerto Rico shrink its underground economy, broaden its tax base, reduce rates, and strengthen and privatize some public corporations, which account for nearly 40% of the island's debt. 

They said the government should also approve legislation requiring the creation of a long-term budget as well as providing greater transparency in its financial reporting.

"Puerto Rico's unique status means that it is one of the few places in the world where finances are not regularly surveyed by a public agency," the report said.

The administration of Gov. Alejandro Garcia Padilla has taken numerous steps to help boost the economy, including implementing changes in public pension plans, streamlining its business registration and permitting process and cutting of expenditures. Garcia also appointed an advisory group for tax reform that is expected to release a report by year's end with plans to implement it by fiscal year 2016.