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Puerto Rico Reform: Doomed before Hurricane Maria even struck, but plans to bring back prosperity begin
On the evening of September 16 2017, Puerto Rico was struck by Hurricane Maria. With a huge economic downturn over the last decade and a $70bn debt bill from the US, this has added greatly to the Puerto Rico’s current problems. President Trump has spoken clearly about the debt problem and has shown little empathy to the US territory. The damaged infrastructure on the island has attracted commercial interest from the likes of Google and Tesla, with companies like these speaking about plans to help Puerto Rico reform.
The Puerto Rican government-debt crisis has been a scenario that has built up over decades. The Puerto Rican government may very well now be in the worst situation it has ever been in. Historically there have been many ups and downs. With the recent arrival of Hurricane Maria just weeks back, the unincorporated US territory has been left in an utter mess that requires immediate attention to prevent further conflicts of interest but more importantly, safe living for local citizens.
After years of mismanagement, the government’s outstanding debt pile exceeds $70bn. These debts increased the government’s debt-to-GDP ratio to around 68%, which had forced it to cut spending, increase tax revenue and spark economic growth so that its obligations could be better funded. All of these milestones were in their beginning phase before Hurricane Maria arrived and this has now left the territory with further problems requiring immediate action from US President, Donald Trump.
Trump has voiced his clear views via social media, and has no shame in bringing up the debt before showing any empathy. With similar occurrences in Texas and Florida, he wasn’t quiet in stating that those states are performing just fine, hardly realizing that Puerto Rico did not receive an equal level of attention as those states did when their crisis occurred.
With the repeal of tax break Section 936 (which allowed businesses to manufacture in Puerto Rico paying no income tax) in 1996; businesses migrated from Puerto Rico strongly affecting its economic performance. After a boom of growth, post 2005 its economy started to shrink and proved a negative economic show.
With the effect of the recent hurricane, tech gurus such as Elon Musk and Google have recognized there is space to build and potentially make commercial progress, as well as offering a third hand to help residents of the US territory.
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