Puerto Rico’s bank accounts lose $717 million in one month

A filing by the Puerto Rico Fiscal Agency and Financial Advisory Authority to the markets on the balance of bank accounts from Feb. 28 to March 31 showed the government’s account balances falling to $24.4 billion from $25.1 billion.

By The Star Staff

The loss of federal funding caused the government of Puerto Rico’s accounts to decrease by $717 million in a one-month period ending March 31, a government document notes.

A filing by the Puerto Rico Fiscal Agency and Financial Advisory Authority to the markets on the balance of bank accounts from Feb. 28 to March 31 showed the government’s account balances falling to $24.4 billion from $25.1 billion.

The drop was primarily driven by a $1 million decrease in pension-related accounts, a $44 million decrease in the central government’s Treasury Single Account (TSA), a $154 million decrease in restricted accounts, a $164 million decrease in public corporations, and a $355 million decrease in the central government’s Non TSA accounts.

The losses include the bank accounts of the Puerto Rico Electric Power Authority, which went from $1.4 billion to $1.2 billion, and the University of Puerto Rico, which went from $457 million to $433.8 million.

As previously reported by the STAR, the Financial Oversight and Management Board has recently been urging the government to develop a plan to curb the loss of federal funds, including the creation of a centralized office to keep tabs on the use of federal funding.

“Puerto Rico does not have a centralized financial management framework in place for reporting federal funds. This has led to various accounting, budgeting, and compliance challenges,” the oversight board said. “The lack of adequate tracking of federal fund usage across Puerto Rico may contribute to inefficiencies, such as potential duplication of benefits or disbursements that are difficult to fully account for. Also, the lack of visibility into the use of federal funds prevents the Government from optimizing the deployment of its own resources, resulting in ineffective spending and federal fund utilization.”

Currently, federal funds, including one-time allocations to Puerto Rico, total $15.4 billion, representing 46.1% of the Certified Fiscal Year 2025 Commonwealth Budget.

In a letter dated April 28 to Orlando Rivera Berríos, executive director of the Office of Management and Budget, the oversight board said Puerto Rico’s reliance on non-recurring federal emergency and stimulus funds has significantly shaped its fiscal landscape in recent years. As those funds are phased out, it is imperative for the government to develop a comprehensive roadmap to transition Puerto Rico toward long-term fiscal responsibility, including financial sustainability, the board said.

Under current federal law, beginning in October 2027, the Commonwealth of Puerto Rico will become responsible for a significantly higher share of Medicaid expenses, leading to a projected reduction in federal Medicaid support starting in fiscal year (FY) 2028. As a result, unless federal law is changed, the commonwealth is projected to face a deficit of some $1.1 billion in FY 2029, the first full fiscal year to reflect the reduction, before any additional spending adjustments are made, the oversight board said.