Wednesday, January 28, 2009

In need of resuscitation

Puerto Rico's economy has shrunk for three years running

Puerto Rico’s new governor, Luis Fortuno, has been quick to acknowledge the scale of economic problems facing the US commonwealth. The island economy has already been mired in recession for nearly three years, and the government again faces the prospects of running out of cash. Yet with the US mainland now in recession as well, the prospects for a turnaround in Puerto Rico any time soon are bleak.

Soon after the November 4th election and two months before his inauguration on January 2nd, Mr Fortuno appointed a 14-member committee of private-sector leaders, headed by banker, Richard Carrion, to offer ideas on how to address the government’s looming fiscal crisis. According to the committee, the fiscal deficit has risen to US$3.2bn. Unless immediate corrective measures are put in place to boost revenue collection and cut spending, the administration is set to run out of funds to meet payroll costs in the coming months. ...



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[Source: The Economist: News analysis

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