You are here

More Puerto Ricans consider exit as crisis deepens

Wednesday, July 1, 2015 - 06:44
GOVERNO65765.jpg
Puerto Rico's Governor Alejandro Garcia Padilla delivers his state of the Commonwealth address at the Capitol building in San Juan, Puerto Rico on April 30, 2015.

[PUERTO RICO] For many Puerto Ricans, events this week that seemed to herald a fraught new period in the island's spiraling economic crisis were just the latest frustrating developments in Puerto Rico's long running decline.

Governor Alejandro Garcia Padilla's announcement on Monday that the US territory would seek a moratorium on up to US$72 billion of debt came after a government commissioned report found Puerto Rico's fiscal crisis was far worse than thought.

The authors, former IMF staffers, proposed tough measures including raising taxes, firing teachers and scrapping the minimum wage, adding to long list of gripes on the island where unemployment is far higher than on the US mainland. "I'm seriously considering leaving. It is sad that we have reached this extreme point," said Emilio Colon, 46, an engineer in Puerto Rico's capital, San Juan.

If Mr Colon did leave the island of 3.6 million for the mainland United States he would join a flood of people like him. Puerto Rico is poorer than any US state and its residents, who are US citizens, are easily wooed by better paying jobs on the mainland.

The Pew Research Center found that outmigration was a net 144,000 from 2010 to 2013, more than the three decades prior to 2000. If the trend holds, the island's population could fall 3.3 million by 2020, according to one estimate.

Puerto Rico's economy has been in or near recession for nearly a decade. Monday's report pointed to a vicious cycle of collapsing investment, tumbling housing prices and weakening consumption, as well as a fiscal deficit that was likely much larger than reported. "He should have given this message way before yesterday,"said Jorge Rivera Tollinche, 36, a lawyer. "I mean, how many commissions have been created already?" The governor said early this year that he would be seeking reelection in 2016, but his support is waning and conditions are likely to get worse before they get better.

An increase to the sales tax to 11.5 per cent from 7 per cent will take effect on July 1, while a 4 per cent tax on business-to-business transactions will begin in October.

Mr Padilla said he would not support scrapping the federal minimum wage to make Puerto Rican workers cheaper to hire but that other austerity measures are on the cards. "The reality is things are getting worse and the US (mainland) is a better option now," said Mr Rivera.

REUTERS