Puerto Rico Budget Protects Pensions, Amidst Austerity

Puerto Rico's Governor Ricardo Rossello announced the U.S. territory's $9.6 billion budget for the fiscal year of 2018, and promised that the “balanced” budget would preserve continued pension payments, Reuters reported.

However, the budget is in compliance with the Fiscal Control Board, whose budget plan mandates austerity measures that have been widely opposed and protested. Details have not yet been released.

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One detail that was announced is that Puerto Rico is including around US$2 billion for the year to ensure that pension payments are honored. The pension program faces a 99 percent funding gap.

“We take a difficult step for the budget, but we guarantee the pensions of all our retirees,” Rossello said during the announcement.

However, Rossello announced that the budget will reduce government expenses by 40 percent, payroll by 13 percent, and would also reduce taxes. The budget was designed to conform with a plan proposed by Puerto Rico's controversial Fiscal Control Board, an unelected group of officials that determine economic policy in the U.S. territory.

The budget is not yet available for review, and so it is unclear to what extent austerity measures such as cuts to public healthcare and education made it into the new budget. Deep austerity cuts have been mandated by the Washington imposed Fiscal Control Board, and have been met with widespread protests, and strikes by students and workers.

Since the budget is known to be in compliance with the austerity promoting Fiscal Control Board, indicating that such measures are likely, Rossello has already been met with criticism.

Referring to the Fiscal Control Board as a “junta,” the mayor of San Juan, Carmen Yulin Cruz Soto said that their “fiscal plan obliges many municipalities to reduce working hours to municipal employees and to collect or eliminate services to our people by taking from the municipalities 426 million dollars. Unfortunately the governor has made it clear that his loyalties are not with the welfare of our people,” Puerto Rico's el Vocero reported.

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The budget is the first since Puerto Rico initiated a process similar to bankruptcy on May 3rd, to restructure its massive US$73 billion debt. The process, which could possibly take several years, is the only way for Puerto Rico to restructure its debt, since ordinary municipal bankruptcy processes are prohibited by U.S. law to Puerto Rico because of its status as a territory.

With a poverty rate already nearing 50 percent, the expected continued austerity measures would undoubtedly fall on the poor, working class, and students who's basic public services are slashed through such measures.

"The governor's public policy has been to act as the messenger of the junta and, in this way, has hidden behind it to become the executioner of Puerto Rico. The budget message will be another sign that the governor turns his back on the people and today will again miss another opportunity to be on the right side of history," the mayor continued.