PR’s record deficit of $70.1 billion in 2016 got worse in 2017
By The Star Staff
Puerto Rico’s primary government recorded a net deficit of $71 billion in fiscal year (FY) 2017, an increase from $70.1 billion from FY 2016, and faced questions about several of its dependencies’ ability to continue as going concerns based on its audited financial statement for FY 2017.
The so-called primary government, including governmental and business-type activities, recorded a net deficit of $71.1 billion as of June 2017, which comprised $16 billion in total assets and $8 billion in outflows of resources, minus some $94 billion in total liabilities and $1.1 billion in deferred inflows of resources.
The net deficit of the commonwealth primary government increased by $391.5 million during FY 2017. The net deficit for government activities increased by $981.3 million and the net position for business-type activities increased by $69.3 million to $589.8 million during FY 2017, stated the report audited by KPMG.
Governmental activities revenue was $18.04 billion in FY 2017, a 1.4 percent decrease from $18.29 billion in FY 2016, the document indicated. Total governmental activities expenses were $18.3 billion in FY 2017, representing a 6.4 percent decrease from $19.56 billion in FY 2016.
The government business-type activities had a total revenue of $3.2 billion in FY 2017, which was a decrease of $191.2 million from the year before.
For FY 2017, the total excess of revenue over expenditures in the general fund, which is used for the budget, was $577.2 million, or the difference between $9.2 billion in revenue minus expenditures of $8.6 billion.
The document noted that at the close of FY 2017 the commonwealth said “substantial doubt” existed that the component units of the Government Development Bank for Puerto Rico, the Puerto Rico Highways and Transportation Authority, the Puerto Rico Electric Power Authority, the Puerto Rico Aqueduct and Sewer Authority, and the University of Puerto Rico would continue as going concerns.
The commonwealth Treasury Department submitted the 2017 audited financial statement to the markets after the Financial Oversight and Management Board for Puerto Rico held two meetings with Treasury Secretary Francisco Pares and Omar Marrero, head of the commonwealth’s Fiscal Agency and Financial Advisory Authority, and told them to come up with a plan to accelerate the release of annual audited financial reports.
Section 206 of the federal Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, requires the oversight board to ensure that the commonwealth government has a process for producing audited financial reports before beginning debt restructuring. The oversight board’s executive director, Natalie Jaresko, said the board has pressed the island government to have audited financials for three years but has relied on the government’s promises that it would deliver the reports.
The oversight board then came up with a proposal calling for the government to submit the FY 2017 audited financial on Aug. 31, the FY 2018 audited financial on Nov. 30 and the FY 2019 audited financial on Dec. 31.