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Puerto Rico is BANKRUPT

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  • Puerto Rico is BANKRUPT

    [b][i]Puerto Rico's Budget Shortfall Nears $560 Million

    By Ken Oliver-Mendez

    January 12, 2002
    Caribbean Business.

    A new Standard & Poors (S&P) report on the credit rating of the Commonwealth of Puerto Rico points with concern to the government's precarious budgetary health.

    Though the Commonwealth's single `A' credit rating has been unaffected to date, Standard & Poors indicated that the credit of the central government and its agencies is on a credit watch with negative implications.

    The S&P report took a dim view of the Commonwealth's recent revelation that a December 2000 prepayment of $193 million for corporate royalty taxes from a large taxpayer had not been screened out of the recurring revenue stream expected in fiscal 2002.

    As a result of the Treasury Department's latest lapse, S&P observes that the total of onetime revenue identified to date that will be applied to Puerto Rico's fiscal 2002 budget is approximately $560 million.

    S&P anticipates that the Commonwealth will tap into $195 million in "rainy day" and emergency funds, among other reserves, in efforts to balance the budget.

    "Projections through the end of the fiscal year indicate that the government could overspend its budget," S&P warns. "The questions remains about the extent of continued revenue and expenditure pressures Puerto Rico will faced in the remainder of fiscal 2002 and in the 2003 budget process."