The “New Fiscal Plan for Puerto Rico” (April 19, 2018): An Unrealistic and Misleading Path to Nowhere

J.Tomas Hexner and Arthur MacEwan
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J.Tomas Hexner: President of Hex, Inc. Founder and director, Science Initiative Group at the Institute for Advanced Study at Princeton, New Jersey
Arthur MacEwan: Professor Emeritus of Economics at the University of Massachusetts Boston

No 2018-09, Development Discussion Papers from JDI Executive Programs

Abstract: The New Fiscal Plan for Puerto Rico, issued by the Fiscal Oversight and Management Board on April 19, 2018, is deeply flawed. It is based on two incompatible goals: establishing a foundation for growth of the Puerto Rican economy and assuring that the Puerto Rican government will move quickly toward meeting its debt obligations. As result of this incompatibility, the Plan is deeply flawed and should be abandoned. The Plan imposes an austerity program, which will undermine possibilities for growth, harm the well-being of the populace, and likely undermine the government’s ability to meet debt obligations. Also, the plan makes unrealistically optimistic assumptions about positive impacts of the structural reforms it imposes on economic relations in Puerto Rico. This paper: (1) explains the austerity nature of the Plan and its negative impacts; and (2) discusses the Plan’s proposed structure reforms—labor reforms, tax reforms, education and human capital reforms, and government regulations and the organization of government agencies.

Keywords: New Fiscal Plan for Puerto Rico; PROMESA; Puerto Rico debt; level playing field austerity (search for similar items in EconPapers)
JEL-codes: E62 E63 O23 O24 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2018-09
New Economics Papers: this item is included in nep-mac and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:408

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