08/2019 The Dire Reality of Most Municipalities: The case of Puerto Rico´s municipalities in times of austerity

The days of business as usual for PR’s 78 municipalities are long gone. What started as sluggish economic growth back in the early 2000s mutated into a full-blown crisis that now includes the highest emigration wave since the 1950s, negative yearly average investment growth since 2010, a default on $72bn of public debt, $49bn in unfunded retirement liabilities, the imposition of a Financial Oversight Board (FOB) and, most importantly, the continued contraction of central government subsidies to the municipalities. In early May 2019, the FOB approved a statute to certify the sustainability of each municipality’s budget. The possibility of lengthy red-tape disbursements for federal reconstruction funds may be the last nails on the coffin of many local governments. Find out why PR’s municipalities face financial distress and what needs to be done. The solution lies in viable regional economic development strategies, which have yet to see the light of day.