Moody’s: Earthquakes will blunt P.R.’s economic recovery
The almost non-stop sequence of earthquakes that have rattled Puerto Rico for the better part of the last two weeks will “exacerbate the commonwealth’s challenges as it tries to rebuild its economy,” Moody’s Investors Service said in a commentary.
“The events highlight the significant environmental risks faced by Puerto Rico and businesses considering investment on the island,” the firm noted, adding they hit “as Puerto Rico’s economic indicators are improving, with population up slightly in 2019 and real economic output growing for the second straight year.”
“Damage from the quakes is likely to blunt a recent trend of positive economic activity and increase the risk of more residents and corporations looking to relocate,” the firm noted in a report released Tuesday.
While it said that the $260 million in contingency funds released by the Financial Oversight and Management Board for Puerto Rico to help repair earthquake-related damage, the associated destruction “will increase infrastructure improvement needs as the Commonwealth continues efforts to recover from the 2017 hurricanes.”
The firm mentioned as an example, the electrical grid, which had been unstable and now at further risk following the seismic events. Costa Sur, which provides about a third of the island’s power generation, suffered significant damage and it may take as long as a year to bring it back online.
“PREPA currently has adequate liquidity to meet its needs. The damage to the Costa Sur plant adds to the challenges facing PREPA related to the age and condition of its infrastructure,” Moody’s said.
“The Commonwealth is in the final stage of evaluating the proposals from the private entities interested in taking over the transmission and distribution operations. A final decision will be announced in the coming weeks,” it said.
However, Moody’s said “prospects for a stronger recovery are hurt by an increase in the types and frequency of natural disasters,” which are fueling the erosion of the island’s population and potentially holding back companies looking to locate or expand in Puerto Rico.