Puerto Rico Consolidated Fund

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The Puerto Rico Consolidated Fund (Spanish : Fondo Consolidado de Puerto Rico) is the sum of all revenues collected by the government of Puerto Rico; in specific, it includes:

Spanish language Romance language

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Government of Puerto Rico Government of Puerto Rico

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.

Puerto Rico General Fund Primary operating fund of the government of Puerto Rico

The Puerto Rico General Fund is the primary operating fund of the government of Puerto Rico and comprises the portion of the Puerto Rico Consolidated Fund collected by the Department of Treasury of Puerto Rico through all the license fees and taxes collected by the executive departments of the government of Puerto Rico. The Fund was about $10.1 billion USD for the 2010 fiscal year, constituting a deficit. Although the Department of Treasury doesn't provide contemporary figures, the Fund is expected to decrease by 8.9% or about $1.0 billion for the 2011 fiscal year, followed by an increase of 1.2% or about $109.7 million for the 2011 year, and then decrease once again by 1.9% or about $177.3 million for the 2013 fiscal year.

A subsidy or government incentive is a form of financial aid or support extended to an economic sector generally with the aim of promoting economic and social policy. Although commonly extended from government, the term subsidy can relate to any type of support – for example from NGOs or as implicit subsidies. Subsidies come in various forms including: direct and indirect.

Federal government of the United States National government of the United States

The federal government of the United States is the national government of the United States, a federal republic in North America, composed of 50 states, a federal district, five major self-governing territories and several island possessions. The federal government is composed of three distinct branches: legislative, executive and judicial, whose powers are vested by the U.S. Constitution in the Congress, the president and the federal courts, respectively. The powers and duties of these branches are further defined by acts of Congress, including the creation of executive departments and courts inferior to the Supreme Court.

The Fund was about $31.4 billion USD for the 2010 fiscal year, constituting a deficit.[ how? ][ quantify ] Although the Department of Treasury doesn't provide contemporary figures, the Fund is expected to decrease by 5.7% or about Decrease2.svg$1.8 billion for the 2011 fiscal year, followed by an increase of 4% or about Increase2.svg$1.2 billion for the 2011 year, and then decrease once again by 5.3% or about Decrease2.svg$1.6 billion for the 2013 fiscal year. [2] [3]

United States dollar Currency of the United States of America

The United States dollar is the official currency of the United States and its territories per the United States Constitution since 1792. In practice, the dollar is divided into 100 smaller cent (¢) units, but is occasionally divided into 1000 mills (₥) for accounting. The circulating paper money consists of Federal Reserve Notes that are denominated in United States dollars.

Fiscal year 1-year term for government and business financial reporting

A fiscal year used by governments for accounting and budget purposes, which varies between countries. It is also used for financial reporting by businesses and other organizations. Laws in many jurisdictions require company financial reports to be prepared and published on an annual basis, but generally, do not require the reporting period to align with the calendar year. Taxation laws generally require accounting records to be maintained and taxes calculated on an annual basis, which usually corresponds to the fiscal year used for government purposes. The calculation of tax on an annual basis is especially relevant for direct taxation, such as income tax. Many annual government fees—such as Council rates, license fees, etc.—are also levied on a fiscal year basis, while others are charged on an anniversary basis.

Consolidated Fund for the 2010-2013 fiscal periods. Puerto-rico-consolidated-fund-2010-2013.png
Consolidated Fund for the 2010–2013 fiscal periods.

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National debt of the United States Face value of federal government securities outstanding

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Economy of Puerto Rico

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 its 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 suzerainty to the United States which controls its foreign policies while exerting trading restrictions, particularly in its shipping industry.

The Commonwealth of Puerto Rico is a territory of the United States and Puerto Ricans are US citizens. However, Puerto Rico is not a US state. Because of this, only Puerto Rican residents who are government employees, and those with income sources outside of the territory, pay federal income tax. All other employers and employees pay no federal income taxes. However, residents of Puerto Rico and businesses operating in Puerto Rico do pay some federal taxes, and the commonwealth's government has its own taxes as well.

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European debt crisis Multi-year debt crisis in multiple EU countries, since late 2009

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The Puerto Rico government budget balance is the overall result of the budget of the government of Puerto Rico over the course of a fiscal year beginning on July 1 and ending on June 30 of the following year. As of November 2012, the government's balance is experiencing a deficit of about $1.1 billion US$. The government has about $15.1 billion in total assets and $48.8 billion in total liabilities.

Budget of the Government of Puerto Rico

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The 2012 Puerto Rico government transition process is the ongoing process in Puerto Rico regarding the government transition between the outgoing governorship of incumbent Governor Luis Fortuño and the incoming governorship of Alejandro García Padilla, governor-elect. The process is mandated and regulated by Law No. 197 of 2002 and started on November 13, 2012, three working days after the Puerto Rican general election of 2012 as the law requires, once García Padilla was preliminarily certified as Governor-elect by the State Elections Commission.

The Puerto Rican government-debt crisis is a financial crisis affecting the government of Puerto Rico. The crisis traces back its history to 1973 when the government began to spend more than what it collected. To cover that imbalance, the government issued bonds rather than adjust its budget. That practice continued for four decades until 2014 when three major credit agencies downgraded several bonds 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 exhaust and that it would thus eventually be unable to pay its debt. To prevent such 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 worker's benefits. Those measures further compounded the crisis by provoking social distrust and unpleasantness in the general population.In August 2018, 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, according to a debt investigation report.

PROMESA United States law on Puerto Ricos debt crisis

The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) is a 2016 US federal law that established an oversight board, a process for restructuring debt, and expedited procedures for approving critical infrastructure projects in order to combat the Puerto Rican government-debt crisis. Through PROMESA, the US Congress established an appointed Fiscal Control Board (FCB) to oversee the debt restructuring. With this protection the then-governor of Puerto Rico, Alejandro García Padilla, suspended payments due on July 1, 2016. The FCB's approved fiscal austerity plan for 2017-2026 cut deeply into Puerto Rico's public service budget, including cuts to health care, pensions, and education, in order to repay creditors. By May 2017, with a debt of $123 billion debt owed by the Puerto Rican government and its corporations, the FCR requested the "immediate" nomination of a federal judge to "decide how to deal with" the "largest bankruptcy case in the history of the American public bond market."

References

  1. ↑ "Definicion de Terminos". Estado Libre Asociado de Puerto Rico. Archived from the original on January 14, 2012. Retrieved December 1, 2014.
  2. ↑ "Financial statements of the Commonwealth of Puerto Rico". Departamento de Hacienda. Archived from the original on December 1, 2014. Retrieved December 1, 2014.
  3. ↑ "Comprehensive Annual Financial Report, Year Ended June 30, 2011" (PDF). Commonwealth of Puerto Rico. Archived from the original (PDF) on October 29, 2013. Retrieved December 1, 2014.
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