High-ranking government officials said Thursday that the decision by Standard & Poor’s a day earlier to slash Puerto Rico’s credit rating to near-junk status was “not a surprise” given the persisting grim economic scenario, but in its analysis the agency is giving the current administration “room to tackle the general fund deficit.”
Puerto Rico’s public finances have stabilized but are still weak, its indebtedness levels and rates are unsustainable, its fiscal viability over the medium term is uncertain, and its economic outlook remains quite modest, said the Center for the New Economy’s Policy Director Sergio Marxuach during an analysis of the administration’s current and future budgetary activity.
It is the general belief that it is bad for a government to have a deficit or be shoulder-deep in debt. However, while it is “perfectly legitimate” for public administrations to have shortfalls and finance them with debt, what is dangerous is when the practice leads to unsustainability.
A Dow Jones/Factiva content provider since 2014
Subscribe to our Dollars & Sense podcast!
