Reform in Puerto Rico: Addressing the Dual Challenge of Weak Growth and High Debt
Puerto Rico’s declining economy has driven their country into $71 billion in debt. As a whole, Puerto Rico has poor growth, an oversized public sector, and a tax system inadequate to the commonwealth’s needs. It is vital for Puerto Rico to prioritize the funding of essential programs while reducing other spending in order to regain economic stability.
The American Action Forum outlines key reforms to improve Puerto Rico’s budgetary and economic outlook. These reforms include: tax reform, Congress regularization of Puerto Rico’s federal reimbursement policies of rum excise taxes to improve predictability and stability, and streamlining, consolidation and where appropriate, privatization, of the large public corporations responsible for $48 billion of debt. Puerto Rico should also reform education to address the Commonwealth’s needs, reform governance that could allow the Commonwealth to save between $20 to $60 million from consolidation of municipalities, modernize Puerto Rico’s labor market, provide exemption from the federal minimum wage, and improve Puerto Rico’s budget process.