The Puerto Rico Treasury Department announced Tuesday it has submitted the Commonwealth’s audited financial statements for the fiscal year 2012-2013 that ended June 30, 2013.
The 2012-2013 financial statements covers the first semester of the fiscal year that corresponded to former Gov. Luis Fortuno’s administration, and includes the operations of all the government agencies, public corporations, the University of Puerto Rico, and other component units of the Commonwealth of Puerto Rico. These statements were audited by KPMG, LLP, said Treasury Secretary Melba Acosta-Febo.
Actual expenditures on a budgetary basis for the General Fund for the fiscal year ended June 30, 2013 amounted to $8.938 billion, which reflects a decrease of $973 million with respect to actual expenditures on a budgetary basis for Fiscal 2012, which totaled $9.9 billion, she said.
Acosta-Febo also noted that the General Fund’s actual deficit for the for the fiscal year ended June 30, 2013, without the effect of other financing sources, decreased by approximately $531 million, or 39.6 percent, with respect to Fiscal 2012, and decreased by approximately $275 million, or 25.2 percent, with respect for FY 2010-2011, which totaled $1.08 billion.
General Fund revenues for Fiscal 2013, on a budgetary basis, decreased by $442 million, to $8.1 billion in Fiscal 2013 from $8.5 billion in Fiscal 2012. Deficiency of revenues under expenditures, on a budgetary basis, for Fiscal 2013, was $807 million, which consists of the difference between actual revenues of approximately $8.1 billion and actual expenditures of $8.9 billion. After other financing sources, the General Fund’s actual deficit for Fiscal 2013 was reduced to $191 million, the agency chief explained.
Efforts fall short
The current administration has been touting the work it has done to reduce the projected General Fund deficit for Fiscal 2013 from $2.2 billion to $807 million through a number of non-recurring revenue measures, which include, among other items, the transfer of $240 million from an excess in the debt service reserve fund for the General Fund, a $333 million financing utilizing Puerto Rico Sales Tax Financing Corp.’s (known as COFINA), and other measures totaling $45 million.
However, despite efforts, a deficit of $191 remains. This amount, however, represents a reduction of $509 million, or 72 percent, with respect to the budgetary actual deficit for FY2011-2012, after other financing measures, of $700 million, she said.
“This administration is firmly committed to eliminating the practice of funding operational expenditures with financings. Contrary to a decade-long practice, the budget approved for Fiscal 2015 does not contain any deficit financing measures, or the refinancing of obligations payable during the fiscal year,” Acosta-Febo said. “For the first time in many years, the Commonwealth will pay its obligations from recurring sources of income without relying on the refinancing. Puerto Rico is making great strides to stabilize its finances.”
All Commonwealth agencies, certain public corporations, and other entities reported a net deficit in the aggregate amount of $47.2 billion, which represents an increase of approximately $5.3 billion with respect to the net deficit as of June 30, 2012.
Long-term debt amounted $56.9 billion, of which $2.4 billion is payable within one year. Long-term debt increased by $3.2 billion, or 6 percent, with respect to the previous fiscal year.
“It is important to note that we have reduced an inherited structural deficit of approximately $2.2 billion on January 2013 to $820 million for the 2013-14 budgets. This deficit was composed of debt refinancing of $575 million and a deficit financing of $245 million,” she said.
“During the course of Fiscal 2014, the budget was amended to account for a reduction in spending of $170 million, which resulted in a revised deficit of $650 million, comprising of $575 in debt service refinancing and $75 million in deficit financing, instead of the original $820 million deficit,” Acosta-Febo explained.
The projected deficit of $650 million has been covered through the refinancing of $575 million in debt service payments (with proceeds from the $3.5 billion general obligation bond issuance completed earlier this year) and a $75 million loan provided by Government Development Bank. To address the revenue gap of approximately $320 million caused by lower than projected revenues for April, the Commonwealth reduced expenses by an additional $355 million, she said.
The Fiscal 2014 budget deficit was addressed during the preparation of the Fiscal 2015 budget, she noted.
The government filed its financial statements more than a month after originally due on May 1st, citing “a series of factors” for the delay to June 30.
“The 2012 Financial Statements were released Sept. 16, 2013, and in a period of less than 10 months we have filed the Financial Statements for Fiscal 2013. This administration is committed to releasing the Commonwealth’s future financial statements within the established due date, which is on or before May 1st,” Acosta-Febo said.
Full financial statements can be found here.