Puerto Rico Economy Central Bank Politics Government

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  1. Stockaholic

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    Economy of Puerto Rico
    From Wikipedia, the free encyclopedia
    Economy of Puerto Rico

    http://r.search.yahoo.com/_ylt=A0LEV7jl4XJVAnwAgHsnnIlQ;_ylu=X3oDMTE0MGxyZTVkBGNvbG8DYmYxBHBvcwMyBHZ0aWQDRkZYVUkxMV8xBHNlYwNzcg--/RV=2/RE=1433621093/RO=10/RU=http%3a%2f%2fen.wikipedia.org%2fwiki%2fEconomy_of_Puerto_Rico/RK=0/RS=JQ7xXXUsvXPCe2GOwfiiVLi54dw-

    The economy of Puerto Rico is classified as a high income economy by the World Bank and as the most competitive economy in Latin America by the World Economic Forum.[16][17] The main drivers of its economy are manufacturing, primarily pharmaceuticals, textiles, petrochemicals, and electronics; followed by the service industry, notably finance, insurance, real estate, and tourism.[c] The geography of Puerto Rico and its political status are both determining factors on its economic prosperity, primarily due to its relatively small size as an island; its lack of natural resources used to produce raw materials, and, consequently, its dependence on imports; as well as its suzerainty to the United States which controls its foreign affairs while exerting trading restrictions, particularly in its shipping industry are the economy's primary limiting factors.

    At the macroeconomic level Puerto Rico has been experiencing a recession for 9 consecutive years, starting in 2006 after a series of negative cash flows and the expiration of the section 936 that applied to Puerto Rico of the U.S. Internal Revenue Code. This section was critical for the economy of the island as it established tax exemptions for U.S. corporations that settled in Puerto Rico and allowed its subsidiaries operating in the island to send their earnings to the parent corporation at any time, without paying federal tax on corporate income. Puerto Rico has, however, surprisingly been able to maintain a relatively low inflation in the past decade. Academically, most of Puerto Rico's economic woes stem from federal regulations that expired, have been repealed, or no longer apply to Puerto Rico; its inability to become self-sufficient and self-sustainable throughout history; its highly politicized public policy which tends to change whenever a political party gains power; as well as its highly inefficient local government which has accrued a public debt equal to 66% of its gross domestic product throughout time.

    In comparison to the different states of the United States, Puerto Rico is poorer than the poorest state of the United States with 41% of its population below the poverty line.[d] However, when compared to Latin America, Puerto Rico has the highest GDP per capita in the region, as well as being the most competitive economy among Ibero-American states, surpassing Chile and Spain.[18][19]

    The commonwealth has a modern infrastructure, a large public sector, and an institutional framework guided by the regulations of U.S. federal agencies, most of which have an active and continued presence in the island. Its main trading partners are the United States itself, Ireland, and Japan, with most products coming from East Asia, mainly from China, Hong Kong, and Taiwan. At a global scale, Puerto Rico's dependency on oil for transportation and electricity generation, as well as its dependency on food imports and raw materials, makes Puerto Rico volatile and highly reactive to changes in the world economy and climate.
     
  2. T0rm3nted

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    Puerto Rico governor declares emergency at Government Development Bank


    Puerto Rico's Governor Alejandro Garcia Padilla declared an emergency at the island's Government Development Bank (GDB) on Saturday, suspending its lending power and freezing most withdrawals as the bank struggles to avoid default on a crucial May 1 debt payment.

    The announcement followed Garcia Padilla signing a law this week authorizing him to take steps to avoid receivership at the GDB, the U.S. territory's primary fiscal agent, and prevent a run on the bank.

    Puerto Rico faces $70 billion in total debt, a 45 percent poverty rate and a shrinking population. Garcia Padilla has said the GDB cannot afford the looming payment. While the island has defaulted on small debt payments in the past, a default at GDB would be the most serious yet.

    This week's order prevents GDB's depositors, such as municipalities and public agencies, from withdrawing their money, except to fund essential services.

    It also suspends minimum reserve requirements at GDB, and prevents the bank from lending money or making payments on debts that it guarantees.

    However, Garcia Padilla declined to exercise his authority to declare a moratorium on GDB's own $422 million May 1 debt payment, citing continuing restructuring talks between GDB and its creditors.

    "The Executive Order establishes reasonable and necessary procedures to preserve liquidity at GDB and allow it to continue its operations for the benefit of the health, safety and welfare of the people," he said in the statement.

    The essential services still allowed for withdrawal, in order of priority, include certain federal funds, payroll, and money for police, fire, medical, education and disaster recovery operations. The order establishes a committee of top island officials to manage these disbursements.

    Local efforts by GDB and other Puerto Rican debt issuers to reach a debt restructuring are running in parallel with plans in the U.S. Congress to draft legislation aimed at solving the island's economic crisis, possibly by allowing it to restructure debt and putting its finances under federal oversight.

    A new draft of that legislation is expected next week from the U.S. House Committee on Natural Resources.

    Some Puerto Rico bondholders have criticized Garcia Padilla's emergency legislation, particularly the authority to issue a moratorium on any debt the governor deems necessary.

    Daniel Hanson, an analyst at Height Securities, said in a note this week the law could draw lawsuits from creditors.

    Rating agency Moody's said in a note on Friday that it would define a non-payment at GDB as a default "regardless of (a debt) moratorium law's provisions."

    LINK - http://www.reuters.com/article/us-puertorico-debt-idUSKCN0X60N1
     
  3. T0rm3nted

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    Puerto Rico unveils new debt restructuring proposal

    Puerto Rico on Monday unveiled a revised restructuring proposal that would cut its debt more modestly, offering general obligation holders about 74 cents on the dollar with other creditor classes getting less, as it tries to solve a crushing economic crisis ahead of looming debt payments.

    The plan would reduce a $49 billion chunk of the U.S. territory's debt to between $32.6 billion and $37.4 billion by exchanging existing debt for two classes of new bonds, a base bond and a capital appreciation bond.

    Read full article here: http://www.reuters.com/article/us-usa-puertorico-debt-idUSKCN0X81MY
     

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