Headquarters | Guaynabo, Puerto Rico |
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Established | December 26, 2006 |
Executive Director | José R. Otero-Freiría |
Currency | USD |
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The Puerto Rico Urgent Interest Fund Corporation (also known as the Puerto Rico Sales Tax Financing Corporation) —Spanish: Corporación del Fondo de Interés Apremiante (COFINA)— is a government-owned corporation of Puerto Rico that issues government bonds and uses other financing mechanisms to pay and refinance the public debt of Puerto Rico. The Corporation is a subsidiary of the Government Development Bank and was created by Law No. 291 of 2006. Bonds issued by COFINA are called Puerto Rico Sales Tax Revenue Bonds. [1] [2] [3]
The Corporation receives half of the state government portion of the Puerto Rico Sales and Use Tax (SUT) (2.75%, or half of the out of the state government’s portion of 6%) and is authorized to use such portion pay or finance, in whole or in part, or fund:
As of May 2011, COFINA had issued over $14.4 billion in bonds pursuant to its Enabling Act, as amended, of which $13.4 billion were outstanding. [3] As an independent corporation, COFINA has the same powers, rights and faculties as the Puerto Rico Government Development Bank under its Constitutional Charter. [3]
The government of Puerto Rico is a republican form of government with separation of powers, subject to the jurisdiction and sovereignty of the United States. Article I of the Constitution of Puerto Rico defines the government and its political power and authority pursuant to U.S. Pub.L. 82–447. Said law mandated the establishment of a local constitution due to Puerto Rico's political status as a commonwealth of the United States. Ultimately, the powers of the government of Puerto Rico are all delegated by Congress and lack full protection under the U.S. Constitution. Because of this, the head of state of Puerto Rico is the President of the United States.
United States Treasury securities are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Treasury securities are often referred to simply as Treasurys. Since 2012, U.S. government debt has been managed by the Bureau of the Fiscal Service, succeeding the Bureau of the Public Debt.
The bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on.
A vulture fund is a hedge fund, private equity fund or distressed debt fund, that invests in debt considered to be very weak or in default, known as distressed securities. Investors in the fund profit by buying debt at a discounted price on a secondary market and then using numerous methods to gain a larger amount than the purchasing price. Debtors include companies, countries, and individuals.
The 2006 Puerto Rico budget crisis was a political, economic, and social crisis that saw much of the government of Puerto Rico shut down after it ran out of funds near the end of the 2005–2006 fiscal year. The shut down lasted for two weeks from 1 May 2006 through 14 May 2006, leaving nearly 100,000 public employees without pay and closing more than 1,500 public schools.
The Government Development Bank for Puerto Rico (GDB) —Spanish: Banco Gubernamental de Fomento para Puerto Rico (BGF)— is the government bond issuer, intragovernmental bank, fiscal agent, and financial advisor of the government of Puerto Rico. The bank, along with its subsidiaries and affiliates, serves as the principal entity through which Puerto Rico channels its issuance of bonds. As an overview, the different executive agencies of the government of Puerto Rico and its government-owned corporations either issue bonds with the bank as a proxy, or owe debt to the bank itself.
Alfredo Salazar is an economist by education and a banker by profession. He is currently Executive Director of a private, nonprofit foundation in Puerto Rico. He entered into public service and ran for an elected position affiliated with the Popular Democratic Party of Puerto Rico (PDP). He ran for the office of Resident Commissioner of Puerto Rico in the United States Congress in the 2008 elections. Prior to running for Congress, he served as Chairman and President of the Puerto Rico Government Development Bank (GDB) and financial advisor to the then governor of Puerto Rico, Aníbal Acevedo Vilá. He had previously served as President of the Puerto Rico Industrial Development Company and GDB president during the first administration of Gov. Rafael Hernández Colón in the mid seventies and Head of the Economic Development Administration during Hernández Colón third administration.
The economy of Puerto Rico is classified as a high income economy by the World Bank and as the most competitive economy in Latin America by the World Economic Forum. The main drivers of Puerto Rico's economy are manufacturing, primarily pharmaceuticals, textiles, petrochemicals, and electronics; followed by the service industry, notably finance, insurance, real estate, and tourism. The geography of Puerto Rico and its political status are both determining factors on its economic prosperity, primarily due to its relatively small size as an island; its lack of natural resources used to produce raw materials, and, consequently, its dependence on imports; as well as its relationship with the United States federal government, which controls its foreign policies while exerting trading restrictions, particularly in its shipping industry.
Taxation in Puerto Rico consists of taxes paid to the United States federal government and taxes paid to the Commonwealth government. Payment of taxes to the federal government, both personal and corporate, is done through the IRS, while payment of taxes to the Commonwealth government, whether personal or corporate, is done through the Departamento de Hacienda de Puerto Rico.
Fiscal policy refers to the "measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals." In the Philippines, this is characterized by continuous and increasing levels of debt and budget deficits, though there have been improvements in the last few years.
The executive branch of the government of Puerto Rico is responsible for executing the laws of Puerto Rico, as well as causing them to be executed. Article IV of the Constitution of Puerto Rico vests the executive power on the Governor—whom by its nature forms the executive branch.
The Office of the Chief of Staff of the Governor of Puerto Rico is the umbrella organization and government agency of the executive branch of the government of Puerto Rico that manages and oversees all the executive departments of the government of Puerto Rico and almost all executive agencies. The Office is headed by the Puerto Rico Chief of Staff and is composed by the Governor's Advisory Board and all other staff appointed by the Chief of Staff. The Office of the Chief of Staff is ascribed to the Office of the Governor.
The Puerto Rico fiscal agent and financing are a group of government-owned corporations of Puerto Rico that manage all aspects of financing for the executive branch of the government of Puerto Rico. These report to the Secretariat of Governance and the Chief of Staff, and do not constitute an agency by themselves but are referred as such in official documents, transcripts, expositions, and conversations.
The Budget of the Government of Puerto Rico is the proposal by the Governor of Puerto Rico to the Legislative Assembly which recommends funding levels for the next fiscal year, beginning on July 1 and ending on June 30 of the following year. This proposal is established by Article IV of the Constitution of Puerto Rico and is presented in two forms:
The Puerto Rican government-debt crisis is a financial crisis affecting the government of Puerto Rico. The crisis began in 2014 when three major credit agencies downgraded several bond issues by Puerto Rico to "junk status" after the government was unable to demonstrate that it would be able to pay its debt. The downgrading, in turn, prevented the government from selling more bonds in the open market. Unable to obtain the funding to cover its budget imbalance, the government began using its savings to pay its debt while warning that those savings would eventually be exhausted. To prevent such a scenario, the United States Congress enacted a law known as PROMESA, which appointed an oversight board with ultimate control over the Commonwealth's budget. As the PROMESA board began to exert that control, the government sought to increase revenues and reduce its expenses by increasing taxes while curtailing public services and reducing government pensions. Those measures further compounded the crisis by provoking social distrust and unrest. In August 2018, a debt investigation report of the Financial Oversight and Management Board for Puerto Rico reported the Commonwealth had $74 billion in bond debt and $49 billion in unfunded pension liabilities as of May 2017.
The Municipal Finance Corporation —Spanish: Corporación de Financiamiento Municipal (COFIM)— is a government-owned corporation of Puerto Rico that issues government bonds and uses other financing mechanisms to pay or refinance, directly or indirectly, in whole or in part, the debts of the municipalities of Puerto Rico payable or backed by the Puerto Rican municipal sales and use tax. The corporation is an affiliate of the Government Development Bank and is identical to COFINA, save that its funds come from the municipal aspect of the sales tax rather than from the state one.
The Tobacco Settlement Financing Corporation is a New York State public-benefit corporation that is administered by New York State Homes and Community Renewal. It used to be a subsidiary to the State of New York Municipal Bond Bank Agency. The Tobacco Settlement Financing Corporation was created as a separate legal subsidiary of the New York State Municipal Bond Bank Agency to securitize a portion of the State's future revenues from its share of the 1998 Master Settlement with the participating cigarette manufacturers in order to make a $4.2 billion payment to State's General Fund. During calendar year 2003, the Tobacco Settlement Financing Corporation issued bonds and remitted the $4.2 billion payment to the State. In 2017, it had operating expenses of $2.94 million, no outstanding debt, and a staffing level of 267 people.