Puerto Rico 2019: What Lies Ahead?

Ricardo Barrios / Inter-American Dialogue

On February 1, 2019, the Inter American Dialogue hosted an event titled “Puerto Rico 2019: What Lies Ahead?” The event brought together a panel of experts on economics, fiscal issues, and energy policy to discuss the current state of Puerto Rico's recovery and its future prospects. The panel was compromised of Richard Campbell, Congressional Research Service; Rossana Torres, Director, Washington Office, Center for a New Economy; Brad Setser, Senior Fellow, Council on Foreign Relations. The featured speaker was Luis Rivera Marin, Secretary of State of the Commonwealth of Puerto Rico. The event was moderated by Michael Shifter, President of the Inter-American Dialogue, who also delivered opening remarks.

Shifter commenced the event by emphasizing the urgency of the island’s situation. Puerto Rico’s economy, still caught in a decade-long recession, now must face the arduous task of reconstruction following dual hurricanes that laid bare the poor state of the island’s infrastructure. This task not only falls on federal or local authorities, but on both, as well as the island’s private sector. Only by working together, Shifter emphasized, can the island find a way forward.

Secretary of State Luis Rivera Marín then took the floor to discuss some of the efforts undertaken by the administration of Governor Ricardo Rossello. In spite of the inequalities between the mainland United States and Puerto Rico, the secretary mentioned that the government has designed an “economic disaster plan” to guide recovery efforts. The subject of energy also figured prominently in the secretary’s remarks. To address this priority area, the government has taken several steps to transform the power grid in Puerto Rico, including the dismantling  of the monopoly held by the Puerto Rico Electric Power Authority (PREPA) and the leveraging of private investment. The secretary remarked that federal assistance, such as the $1.5 billion in grants awarded last year by the Department of Housing and Urban Development, is indispensable to build a better Puerto Rico.

The secretary’s remarks were followed by a moderated panel of experts that probed deeper into the island’s situation. Panelists agreed that the next couple of months will be crucial to Puerto Rico’s future. Brad Setser, senior fellow at the Council on Foreign Relations, was most vocal on this point. Noting the recent influx of federal funds, the economist explicitly stated that if Puerto Rico doesn’t experience some type of economic growth over this fiscal year, it probably never will. Furthermore, with regards to Puerto Rico’s outstanding debts, Setser remarked that any deals regarding Puerto Rico’s debt should take into consideration the island’s poor economic situation, which will gradually reduce the island’s ability to make repayments in the immediate future—contrary to what most debt deals project.

Speaking to the island’s economic performance, panelist Rosanna Torres, director of the Washington office of the Puerto Rico-based Center for a New Economy, stated that there no simple solutions to the island’s situation. Asked if tourism could address the island’s economic needs, Torres said that relevant actors “have to comprehensively address the root of the issues, and that takes congressional action.” This is particularly true as disaster recovery funds begin to dry out, and the island economy comes down from the aid-fueled “sugar high.”

While all speakers agreed that action is necessary, they also agreed that relevant actors should be careful to assure to operate within realistic bounds. In this respect, the Congressional Research Service’s Richard Campbell emphasized that it will take years to rebuild quality energy infrastructure in Puerto Rico, much less get the island running purely on renewable sources.

The event concluded with a Q&A session which touched on topics including tourism, the island’s political status, and the role of the diaspora in helping promote Puerto Rico’s recovery.

Watch the full recording here.