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San Juan, Dec 27 (EFE).- The Fiscal Oversight Board (JSF) reported this Wednesday that the income of the Government of Puerto Rico in the first quarter of fiscal year 2024 exceeds projections, but warned that “significant budget pressures add risks to fiscal stability”.
This was indicated in the first report of a new series of updates on Puerto Rico’s financial results that the Board, created by the United States Congress to control the island’s public finances and restructure its multimillion-dollar public debt, plans to issue quarterly.
The executive director of the Board, Robert Mujica, explained that income is higher than projected “mainly due to higher income tax collection.”
“However, Puerto Rico faces significant potential financial obligations that the governor and the Legislative Assembly must take into account when deciding on any initiative that affects the financial plan,” he added.
Mujica recalled that “the pressures to increase spending while taxes were reduced contributed to the current fiscal crisis” of the island, which in January 2022 approved a restructuring plan for about 80% of the central government’s debt, which was reduced from $33 billion to $7.3 billion.
“The federal government’s non-recurring emergency and stimulus funds continue to have a temporary impact on the economy. Taking on additional expenses or reducing income without a sustainable recurring funding source could create an imbalance,” Mujica detailed.
Potential significant future spending obligations are increased health funding, uncertain levels of long-term federal Medicaid funding, and potential new recurring expenses currently paid for with nonrecurring federal funds, including teacher pay increases.
The Board’s report also cited revenue reductions without compensatory budget measures, possible additional contributions from the Government of Puerto Rico to finance disaster relief projects, and recent spending projects approved by the Legislative Assembly.
In the first quarter of the current fiscal year (2024), General Fund revenue collected exceeded the same period of the previous year by $207 million and projections by $212 million.
However, the Board warned that the stability and predictability of tax revenue collection in Puerto Rico is challenged by the characteristics of its tax base, in which corporate taxes contribute a significantly greater proportion.
They represent about 38%, compared to just 8% of state and federal revenues in the US, and historically, corporate taxes are volatile and difficult to project.
Regarding the expenses declared in the quarter, these were 609 million dollars lower than projections, but 177 million higher than those of the same period of the previous year.
As of September 29, 2023, the Treasury Department Main Account (TSA), the main operational account of the Government of Puerto Rico, had an unallocated net available cash balance of $816 million. EFE
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