Fiscal pressures are causing controversy in Puerto Rico, but so too is fiscal policy-making. On July 5, Governor Ricardo Rossello announced that he would seek a court injunction that would prevent the budget he has signed from being disallowed in favour of the nearly 9-billion-dollar budget devised by the US-based federal fiscal control board.
Domestic and foreign investor confidence in Puerto Rico is likely to fall further, complicating economic recovery and reform.
The episode will further damage Puerto Rican politicians’ credibility when they make representations to Washington.
The polarisation over Puerto Rico’s long-term future, and the US statehood question, will deepen.
Delays in repairing the island’s economy, and then reforming it for the future, could see worker outflows.
