Governor - Aníbal ACEVEDO VILA

Public Holidays: Three Kings' Day - Jan 6th; Good Friday; Emancipation Day - March 22nd;  De Diego's Birthday - April (3rd Mon); Rivera's Birthday - July (3rd Mon); Constitution Day -  July 25th; Barbosa's Birthday - July 27th; Discovery Day -  Nov. 19th; De Hostos's Birthday - January (2nd mon)

Economic and Fiscal Reconstruction Plan 2009

Source: Government of Puerto Rico

INFORME AL GOBERNADOR DE PUERTO RICO sobre RECONSTRUCCIÓN FISCAL

January 8th 2009

• Puerto Rico atraviesa por una de las peores crisis económicas y fiscales de su historia. La crisis económica y financiera mundial, la recesión económica local en los últimos 3 años, y la larga trayectoria de nuestro gobierno de incurrir gastos en exceso de
  ingresos y utilizar fondos no recurrentes o financiamientos para pagar gastos se han combinado para poner a nuestro gobierno en una situación crítica que requiere que el gobierno tome medidas severas e inmediatas para enfrentar la situación.
• Sólo hay tres maneras de resolver la brecha entre ingresos y gastos: aumentar los ingresos, reducir los gastos o financiar el déficit. Esta última está disponible de manera muy limitada, a consecuencia de la contracción en los mercados de valores, y
  sólo si viene acompañada de otras medidas conducentes a resolver el déficit mediante aumentos de ingreso y reducción de gastos. El pretender financiar el déficit indefinidamente y sin estar acompañado de estas otras medidas, resultaría en una degradación de la clasificación de crédito de nuestra deuda, lo que tendría
  repercusiones nefastas.
  source: Government of Puerto Rico

Performance of 2006

Puerto Rico is noted for its diverse output performances between their industrial and service sectors. Manufacturing ranks as the country’s highest contributor to GDP earnings (estimated around 44% in 2006).However, the economy’s GDP growth performance of 2006 stood at a negligible 0.6%. Puerto Rico’s sugar industry output has diverged to trivial levels, and as of recent, production of livestock replaced this industry as being the main revenue earner for the country’s agricultural sector. Moreso, the unpredictable nature of tourism has become a main source of income (with fluctuating tourists’ arrivals, as they increased in 2004 to 5 million and then decreased to an estimated 3.9 million in 2006). [Sources:Puerto Rico Economy,:Encyclopedia-Puerto Rico]

Understanding the Post World War II trend in Puerto Rico

Upon further investigation, fiscal operations seemed to be the most integral part of the economy’s demise. A summary on the article, “The Economy of Puerto Rico” (second chapter), Bosworth and Collins examined the level and growth of production and income in Puerto Rico. A U.S. Tax code introduced in 1976 provided strong incentives for U.S. corporations to exploit profits from Puerto Rico (U.S. companies benefited by being exempted from U.S. taxation). This created a distortion of estimating Gross Domestic Product of the country, and ‘adjusted’ GDP estimates from the authors suggests a 20% cut in the level of Puerto Rican GDP by 2003. The tax policy as quoted “has done a disservice to Puerto Rico by providing U.S. corporations incentives for investment with few or no employment or local linkages.”

Between the periods 1950-75, Puerto Rico’s economy growth rate was comparable to that of East Asia, Ireland, and Latin America; output rates per person averaged around 5% a year. The economy was then characterized by its efficiency of factor usage. But after 1975, productivity growth rates per person fell to 1%, and there was a deficiency between capital accumulation and employment.

Public Debt

On May 1, 2006, the Puerto Rican government faced significant shortages in cash flows, which forced the closure of the local Department of Education and 42 other government agencies. All 1,536 public schools closed, and 95,762 people were furloughed in the first-ever partial shutdown of the government in the island's history.[29] On May 10, 2006, the budget crisis was resolved with a new tax reform agreement, with plans to apply a temporary 1% tax input so that all government employees could return to work. On November 15, 2006 a 5.5% sales tax was implemented. Municipalities have the option of applying a municipal sales tax of 1.5% bringing the total sales tax to 7%.[Source:Puerto Rico Profile

Interestingly enough, Puerto Rico spends a smaller share on education, and a higher share on health and welfare. James Alm’s view on Puerto Rico’s fiscal situation highlights the weak tax administration and the overuse of tax incentives which undermined the government’s attempt of promoting development. Tax revenue in Puerto Rico comes exclusively from three sources: personal income taxes, corporate taxes and to a less extent excise duties. A major problem with having a narrow tax base system means that those left in the tax net face potentially greater distortions of their decision making. Alm’s recommends lowering the corporate taxes and eliminating most of the tax incentives, he further states that incorporation of value added tax would expand the tax base and target consumption.

Solutions to providing more employment

A common theory for low employment and low labour participation rates are the transfer programs involved in Puerto Rico. Authors such as, Maria Enchautegui and Richard Freeman express their views on how, Social Security Disability and Nutritional Assistance programs impedes the economy’s progress by giving large disincentives to Puerto Rican men. Burtless and Sotomayor also further this suggestion, and states that government should link program benefits with incentives to seek employment or to increase the hours of work. [source: The introduction and summary of "The Economy of Puerto Rico"]

EIU Puerto Rico Country Profile 2008 
Population                                                 

•  Population growth is slowing and the average age is rising. According to 2007 estimates from the US Census Bureau, the population, which is primarily Spanish-speaking, but often bilingual in English and Spanish, stands at around 3.94m. Between 1980 and 1990, population growth averaged slightly more than 1% per year, but fell to an annual average of 0.4% in 2003-07,according to US census estimates. Part of the slowdown in population growth
has been the result of emigration to the US, but there has also been a decline in fertility rates, with the average number of children per woman falling from 3 in the 1970s to around 1.8 currently. As a result, the population is ageing. The United Nations (UN) estimates that 22% of the population was under 15 in 2005, 61% was aged between 15 and 59, and 17% was over 60. By 2050, it forecasts that 16% of the population will be under 15, 54% between 15 and 59 and 30% over 60.

•  Puerto Rico is one of the most densely populated areas in the world. With an average of 429 people per sq km, Puerto Rico is far more densely populated than any of the 50 US states. Over the past four decades, the island has been transformed from a traditional agrarian country into a modern industrial society. Consequently, there is a high degree of urbanisation, with the capital, San Juan, and its suburbs accounting for around one-third of the population.

•  There has been large-scale migration to the US. Current estimates suggest that around 2m Puerto Ricans have migrated to the US over the last century. Although migration continues to this day, the majority of Puerto Ricans now living on the mainland are descended from migrants, but were born in the US. The highest concentration of Puerto Rican migrants and their descendants is
in New York, although there are also large numbers living in Florida, Chicago and Philadelphia. Puerto Ricans resident in the US compose around 10% of the US Latino population. Migrant remittances were important from the 1940s to the 1960s, but ceased to play a role in the economy as living standards improved.

•  Life expectancy is rising. According to data from the CIA World Factbook, life expectancy at birth increased to 74.6 years for men and 82.7 years for women in 2008, up from 71.1 years (men) and 80.3 years (women) in 2000. This compares favourably on both a regional and international level; at a current average of 78.6 years, life expectancy in Puerto Rico is higher than in the US (78.1
years) and in most of its Caribbean neighbours. In the CIA!s global ranking, Puerto Rico is ranked 41st out of 223 countries for life expectancy.
source: Economist Intelligence Unit

2005 Latin America and the Caribbean Selected Economic and Social Data

The 2005 edition of Latin America and the Caribbean: Selected Economic and Social Data (the LAC Databook), includes the most recent data at the time of publication from a multitude of international and national sources. The Bureau for Latin America and the Caribbean of the US Agency for International Development presents this Databook with the goal of gathering and presenting the most up-to-date information possible from official country sources and leading international institutions."
Source:USAID

Solid Waste Management

Selected statistics indicators for PUERTO RICO
UN Statistics Division for PUERTO RICO
Caribbean Social Statistics Database
Caribbean Trade Statistical Database

Microsoft invertirá $635 millones en tecnología para la Isla

Washington, D.C.- Puerto Rico recibirá una inversión de $635 millones  que podrá utilizar para desarrollar la tecnología en la Isla, como parte de una alianza que estableció el Gobierno local con la compañía Microsoft en la Capital Federal.