SAN JUAN, Puerto Rico - Government officials have revealed that Puerto Rico's overall deficit stood at a record $39 billion in the past fiscal year, adding to gloom over the economy.
The figure was made public late Monday in an annual audited report that Puerto Rico is required to submit to federal officials who oversee the municipal securities market. It's a $5.4 billion increase from the 2011 fiscal year and comes as the U.S. territory struggles to emerge from a seven-year recession.
"The numbers are transparent and demonstrate the critical state of the government's finances," Jaime Perello, president of the island's House of Representatives, said Tuesday.
The revelation comes a week after Puerto Rico's Government Development Bank announced it was reducing its bond sales due to a record yield of more than 10 per cent, spooking investors and raising concerns about the island's economic health.
Perello and others blamed the deficit on the administration of former Gov. Luis Fortuno, who governed Puerto Rico from 2009 to 2013 before losing to Gov. Alejandro Garcia Padilla in November.
Fortuno's administration laid off some 30,000 public workers, cut salaries and raised taxes, but Rep. Rafael Hernandez, House treasury committee chairman, said those actions did not save the economy.
"There was no fiscal discipline and the country saw the highest debt in its history," he said.
Jose Torres, general secretary of Fortuno's pro-statehood New Progressive Party, said Fortuno inherited a financial crisis from the previous administration.
The overall deficit of $39 billion covers all government agencies, public corporations and other entities, including the University of Puerto Rico and the Government Development Bank. The report also noted that the territory's general fund deficit stood at $1.3 billion in the 2012 fiscal year, a 24 per cent increase from the previous year. That amount was reduced to some $700 million after the government issued $952 million in bonds.
Puerto Rico also has a $69 billion public debt.
Treasury Secretary Melba Acosta said the deficits are being reduced and that the government's priority is to revive the economy. She noted that officials have revamped the island's crumbling pension system, increased water rates and privatized management of Puerto Rico's main international airport. These and other measures are expected to generate some $1.4 billion in new revenue, Acosta said.
"We have taken fast, decisive and unprecedented steps to meet the enormous challenges we inherited," she said.
Acosta said the 300-page comprehensive annual financial report was submitted more than four months after its due date because of the financial state of some public agencies. She said the government expects to submit the next report on time in May 2014.