Economists Assn. gives fiscal board poor marks
By THE STAR STAFF
The Puerto Rico Economists Association on Sunday released the results of a survey titled “Ten Years After PROMESA: Economists’ Assessment of the Performance of the Financial Oversight and Management Board for Puerto Rico.”
The survey concluded that there is an unfavorable perception regarding the federal entity’s performance.
The survey, which included 51 participating economists, was conducted between Aug. 19 and Oct. 4 of this year.
The results indicate that 76% of the economists surveyed disagree or strongly disagree that the policies promoted or approved by the oversight board have contributed to Puerto Rico’s economic growth. Similarly, 75% believe that those policies have not contributed to long-term economic development, while 73% question their contribution to improving the functioning of the labor market. The unfavorable perception also extends to the effects of fiscal discipline on productive activity: 76% of participants disagree that such discipline has had a positive impact on job creation, and 71% question its contribution to the creation of new businesses.
“These results raise questions about the effectiveness of the economic policies implemented over the last decade. Although restructuring public debt and stabilizing government finances are important objectives, they do not necessarily translate into economic growth, productivity gains, or improvements in the population’s well-being,” said Julio César Hernández, the current acting president of the Economists Association and a professor at the University of Puerto Rico, Mayagüez Campus, in a written statement. “Fiscal discipline should not become an objective detached from economic development. Its purpose should be to establish the conditions necessary to promote investment, strengthen human capital, improve infrastructure, and expand Puerto Rico’s productive capacity. The survey results suggest that a significant proportion of economists do not see sufficient progress in these areas.”
The assessment of the oversight board is also unfavorable regarding areas related to the functioning of the government. Seventy-one percent of the economists believe that fiscal oversight has not contributed to improving the administrative efficiency of the government, while 69% question its contribution to reducing corruption. Furthermore, 65% disagree that the board has improved the administration of the tax system, and 55% question its impact on the transparency of public finances.
Additionally, 63% of the participants believe that the board has not contributed to improving the availability and quality of the statistics produced by the Puerto Rico Planning Board. Similarly, 55% question its contribution to employment and unemployment statistics, and 53% to price index statistics. Seventy-three percent of the economists surveyed believe that the overall outcome has not been adequate under the oversight board’s supervision, while only 2% offer a favorable assessment. Likewise, 74% question the scale of the spending cuts imposed on the University of Puerto Rico (UPR).
However, the survey also identifies areas where economists’ opinions are more divided. Forty-four percent believe that the oversight board’s supervision has helped prevent government spending from exceeding revenue, while 32% disagree. Similarly, 33% believe that the process under the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, has brought Puerto Rico closer to regaining normal access to capital markets, whereas 45% hold the opposite view. The differences suggest that economists distinguish between outcomes related to budgetary control and those linked to economic development. Fiscal stability is an important condition for the functioning of the government, but it does not, in itself, constitute an economic development strategy.
Overall, 60% of the economists surveyed disagree that the oversight board’s performance since its creation in 2016 has been positive. Furthermore, 63% question whether its overall impact on Puerto Rico’s economic future has been favorable, and 71% believe it has failed to create the conditions necessary to reduce the risk of a new fiscal insolvency crisis.
Regarding the board’s continued existence, 57% disagree that it should remain in operation until Puerto Rico regains full access to capital markets, while 31% favor that position.
