April 23, 2021

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Proposals in the face of uncertainty

For the first time in history, Puerto Rico has nine candidates for the most important position on the island.

Although five of these candidates are in a primary race, the number of those interested in leading Puerto Rico is particularly valuable given the difficult situation in the U.S. territory.

Eduardo Bhatia Gautier, Alexandra Lúgaro Aponte, Juan Dalmau Ramírez, Wanda Vázquez Garced, Carlos Delgado Altieri, Pedro Pierluisi Urrutia, Carmen Yulín Cruz Soto and César Vázquez Muñiz claim to have the ability and ideas to lead a bankrupt Puerto Rico. Eliezer Molina, the only independent candidate in the race for La Fortaleza, did not answer questions from El Nuevo Día.

Puerto Rico is changing. As of the next term, the island is estimated to have 2.9 million inhabitants or the equivalent of its population about 50 years ago, according to the most recent fiscal plan certified by the Oversight Board.

While Bhatia Gautier, Cruz Soto, and Delgado Altieri are Popular Democratic Party (PPD) candidates running for governor while Vázquez Garced and Pierluisi Urrutia are the New Progressive Party (PNP) candidates for governor.

This year´s general elections bring two “first time”. This will be the first time that the PPD will hold primary elections for governor and it will also be the first time Puerto Rico votes its governor after the resignation of Ricardo Rosselló Nevares last summer following the arrests of several people associated with his government on charges of corruption and the publication of a group chat that incriminated him.

Puerto Rico is moving toward its most important democratic appointment with a society shaken by the earthquakes that impacted the island’s Southwestern region earlier this year and overwhelmed by the coronavirus pandemic. As of yesterday, COVID-19 had claimed the lives of some 63 people diagnosed with the virus, and another 79 suspected deaths had been reported, according to the Demographic Registry, totaling 142.

While official data indicate that the scope of the pandemic is far from the initial estimates, COVID-19 has triggered an economic crisis with humanitarian consequences that threaten, among other things, to worsen poverty levels in Puerto Rico, causing the insolvency of the Unemployment Insurance Fund and lead to more job losses than those related to the 2008 financial crisis and Hurricane María in 2017.

On the other hand – and although it is estimated that the pandemic will translate into some $12.8 billion in direct aid to individuals, businesses and public agencies from the federal government as well as a local response plan of some $787 million – Puerto Rico does not appear to be advancing in the tasks of post-María reconstruction.

After almost three years, only throughthe Federal Emergency Management Agency (FEMA), Puerto Rico has not still used some $45 billion in funds allocated for reconstruction.

Despite such an injection of capital, the fiscal plan certified by the Board reflects two realities. The first is that, as a result of the coronavirus pandemic, the government will see a drop in tax collections, which will once again test the state’s ability to provide services to the population. The second reality is that economic uncertainty remains four years after the approval of PROMESA.

The statute was the political solution to restructure the government’s financial obligations and created the Board, under the premise that an entity above the elected government – whose validity was confirmed a week ago by the U.S. Supreme Court – would bring discipline the U.S. territory. However, a shrinking economy makes a restructuring and fiscal balancing process impractical.

As a result, whoever receives the people’s favor in the upcoming elections will have to govern with the oversight of the Board.

In separate interviews, eight of the gubernatorial candidates offered El Nuevo Día a summary of the Puerto Rico they foresee in terms of economic development, what they will do to offset the consequences of the pandemic, the threads they will pull in Washington D.C., and what they will do with the fiscal plan and the agreements reached by the Board and bondholders.

Eduardo Bhatia Gautier

Popular Democratic Party candidate for governor

What will you do to offset the consequences of the pandemic?

Firstly, the pandemic requires a robust testing and tracing system that is still – today – absent.

In addition to temporary state and federal economic incentives, an acceleration in the transition to a more virtual economy has to be recognized, and that requires training our workers. We also need three pillars: technology, permits, and labor rights. Our future depends on successfully navigating this transition.

What is your position regarding the agreements between the Board and PREPA’s creditors and the government?

No agreement in PREPA can include a solar tax or stop the transition to renewable energy. I will not allow it. Even without considering the COVID-19 impact, the agreed debt levels are unsustainable. Now that the agreements will be reviewed, we need to ensure that the necessary funding for essential public services, adequate funds for public pensions and investments for economic growth, among others, are guaranteed.

Will you accept the Board-certified fiscal plan?

We must speak the truth to the people: we will be bound by the budget for fiscal year 2020-2021. The lack of discretion, however, seems mitigated by the moratoriums on budget cuts as a result of the COVID-19. Fiscal plans have to be updated annually, and this process will begin as soon as someone is sworn in as governor. Together with my team, we are already preparing viable fiscal plans that will strengthen social investment and cut political spending.

What is your main economic strategy?

The economy has to promote opportunities for all. The pandemic has revealed the need for pharmaceutical manufacturing on American soil again. This is an opportunity to bring thousands of manufacturing jobs from Asia and China to Puerto Rico. We have developed a working agenda in Washington to work through the tax maze.

How will you address Puerto Rico’s lack of credibility in Washington?

You don´t buy credibility; you build credibility by assuming responsibility, establishing trust, and demonstrating the capacity to govern with clear and transparent metrics. I bring with me the responsibility and credibility that I have built over more than 25 years in public service. It’s a well-known career in the federal capital that includes managing $200 million in public funds without questions, and always speaking freely, with robust, relevant data and the truth.

What policies will strengthen local business activity and foreign investment?

Locally, we need to continue eliminating unnecessary bureaucracy and achieve reliable energy at a reasonable cost. We will promote the green economy model by encouraging recycling and the use of renewable energy. We need to provide tax certainty to multinationals and, at the same time, promote fair competition by attacking price transfer to avoid paying the contributions that are justly due.

Alexandra Lúgaro Aponte

Candidate for the Movimiento de Victoria Ciudadana )Citizens’ Victory Movement)

What strategies will you design to offset the economic impact of COVID-19?

My government will ensure that available federal and local funds are used to financially support our Puerto Rican business structure. Local money and federal money that is used in Puerto Rican businesses will have a greater impact on economic growth. Since Hurricane María, the experience has been linked to putting money into foreign corporations, which have taken a lot of profit out of the island without creating infrastructure, permanent jobs, promoting knowledge transfer, or leaving capital on our island. That strategy does not work, investing in local companies does.

What is your position regarding the agreements reached between the Board, creditors, and the central government in PREPA?

My position has been that nothing should be negotiated without first auditing Puerto Rico’s total debt. Paying debts without knowing what you owe and to whom you owe it is a bad public policy and a dangerous form of negotiation.

If you are elected, will you accept the newly certified proposals and adjustments in the fiscal plan?

No. The fiscal plan only contemplates austerity policies and no proposals for the island´s economic development.

What is your main strategy in economic terms?

We want to strengthen Puerto Rican businesses and we want to promote education, health, and the University of Puerto Rico as welfare and development mechanisms that promote public and private investment within the local economy.

What strategy will you adopt to correct the problems linked to the disbursement of federal funds and the credibility of Puerto Rico in Washington?

Our presence and credibility in Washington D.C. will go hand in hand with a sound public administration, a first-rate Resident Commissioner, and the appointment to the Federal Affairs Administration of individuals capable of establishing permanent channels of communication with federal structures. So far, both the Commissioner and members appointed in federal affairs have performed poorly and have not been able to achieve any credibility in the federal capital.

What strategies or policies will you adopt to strengthen local business activity and to attract foreign investment?

We will use incentives for the development of local businesses, which will be financed by toll gate tax and with the money released by the debt audit.

Juan Dalmau Ramírez

Puerto Rican Independence Party candidate

What will you do to offset the economic impact of COVID-19?

The economic crisis long predates the pandemic. Its roots are the system weaknesses, with a lack of trade policy, with cabotage rules, the inability to reach agreements… Now, it’s more important to address those issues. Faced with the immediate problems, we must count on reopening with a clear and safe schedule. The companies that have suffered the most, the small and medium-sized businesses, must be able to take on credits, loans, and receive assistance from the government.

What is your position regarding the agreements reached between the Board, PREPA’s creditors, and the government?

The debt is unpayable, and the agreements are unhelpful and harmful. PREPA’s debt restructuring process is shady because of the lack of an audit. And there, the threat is that energy costs rise. This will impoverish residential and commercial consumers. The result of both is that economic depression deepens and poverty rates increase.

If you win the election, will you accept the proposals and certified adjustments for the fiscal plan?

The debt is unpayable. We need to cut 90 percent of the debt… It is necessary to update the government’s financial statements, which have been stuck since 2016 and present a true debt sustainability analysis that includes the coronavirus. I would fight the Board’s austerity measures, as they would condemn us to extreme poverty. I would investigate unthinkable tax exceptions, as their impact on the economy has not been examined.

What will be your main strategy in economic terms?

Puerto Rico lacks development tools, but there is a reason why we have to start … (He mentioned diversifying the economy and boosting local capital). The government must speed up payments to suppliers, support small businesses, and protect consumers. I would fight against cabotage rules, in favor of reducing taxes on Puerto Rican corporations and having foreign corporations unfairly exempt to pay taxes. The money would be reinvested in business expansion and job creation.

How will you address credibility problems in Washington and the use of federal funds?

The government of Puerto Rico has to restore credibility with the people. Credibility is earned through honesty… Federal funds are a buffer for the underdevelopment to which the colony condemns us. However, the responsible thing to do is to honestly and transparently use the funds. I will pass laws with public, strict, and transparent criteria for all contracts, subcontracts, and transactions. I would end impunity for those who embezzled from the people.

What will you do to strengthen local businesses and attract foreign investment?

Federal laws terribly limit the economy and the possibility to attract capital, and that must be overcome. The powers of sovereignty are indispensable. However, we would immediately ensure stable government funding, stimulate local production in agriculture and manufacturing, and promote new businesses, turning managerial talent into entrepreneurs.

Wanda Vázquez Garced

New Progressive Party candidate for governor

What will you do to offset the economic impact of COVID-19?

We have managed, in this crisis, to boost economic development through incentives to small and medium-sized entrepreneurs, and those who are self-employed. We have also facilitated the process of reopening businesses through innovative mechanisms, such as self-certification, which avoid bureaucracy. We aim to encourage and promote a successful and safe reopening of the economic sector.

What is your position regarding the agreements with PREPA and central government bondholders?

Any agreement before the pandemic must be revised according to the new reality, which brings a totally different scenario.

The agreements will be reevaluated once we have certainty regarding the effect of the pandemic on the economy, and PREPA’s paying capacity. Our economic reality changed dramatically with the hurricanes. We had a socioeconomic reality that changed again because of issues we had no control over, such as the earthquakes and the pandemic.

Will you accept the proposals and adjustments of the new fiscal plan?

The fiscal plan for this year, to some extent, puts a stop to the cuts policy that the Board implemented. This decision does not mean that we will stop the efforts made and continued by my government. The priority will be to ensure the health of all Puerto Ricans. We will not spare any effort until we can guarantee the defeat of COVID-19. We will also continue to reform the government, facilitate the permit process, improve the power grid, infrastructure, and strengthen the private sector.

What will be your main economic strategy?

I support bills such as Resident Commissioner’s HR-6443, which seeks to bring pharmaceutical and manufacturing industries back on the island. In the past few years, we have seen the rapid growth of small, medium, and micro-sized businesses. I will expand programs to support these businesses, and I will create an environment of innovation and entrepreneurship. We will promote exports and the use of technology to expand businesses. We will address the challenges such as capital, permits, and energy costs that startups face.

How will you address credibility problems in Washington and the use of federal funds?

One of my priorities has been to gain Washington’s trust. In six months, I signed an agreement that gives us access to $8.211 billion in CDBG-DR funds for housing projects. We will continue to earn their trust with transparency. My experience as former Secretary of Justice has been committed to addressing the issues that led to the loss of trust, working to eliminate that concept of corruption that does not represent us.

What will you do to strengthen local businesses and attract foreign investment?

We recently announced that there will be a 19 percent reduction in electricity rates in June. We have achieved what many have unsuccessfully proposed. We negotiated PREPA’s contracts, we took up renewable energy initiatives, converted units to gas. The combination of that has allowed us to make the announced reduction. But we are not satisfied and we will implement other initiatives. We will also reform the process of opening businesses with self-certification.

Carlos Delgado Altieri

Popular Democratic Party candidate for governor

How will you offset the impact of COVID-19?

We must help the island’s entrepreneurs, especially smaller and medium-sized companies, to try to reduce their losses. Opening restaurants at 25 percent capacity was a good idea, but the curfew must be changed to increase the sales period. We can also create an Economic Development Bank program for SMBs to access loans at preferential rates to offset expenses that cannot be charged to the consumer, and a program with credit unions so they can provide financing to SMBs.

Will you accept the fiscal plan certified by the Board?

No way. There is a new reality here. We do have to revise PROMESA because even the Board had two tasks: debt repayment, and economic development, and the Board has done little or nothing for economic development. The role of the Board has to be in line with the new reality. Those dialogues in Congress, they have to serve to make the fiscal reality of Puerto Rico understood because what is vital are economic measures.

What is your position on the agreements with PREPA and the central government?

Paying the debt is a responsibility, but economists like Ramón Cao had already said that what had been agreed in PREPA cannot be paid, and it is the same with the other agreement. The island’s new economic reality requires new negotiations, and that will be my approach. The Board already knew that it was impossible.

What is your main economic strategy?

The most important thing should be the development of the Puerto Rican industrial sector. Although financial tools were encouraged, operating conditions for entrepreneurs are adverse. We must develop other sectors, such as tourism, with broader visions for the entire island and entrust the UPR in Mayagüez and La Montaña (Utuado) with a plan for industrial agricultural production to reach, in 10 years, the supply of up to 70 percent of our food.

How will you restore the island’s credibility in Washington?

The PNP has done terrible damage this term… It’s vital to fight corruption. In addition to the Office of the Comptroller and internal controls, I plan to create a body of internal auditors to examine every transaction of $5 million or more. That group will be attached to La Fortaleza and will verify everything while it´s happening, from the bidding process or the request for proposals, until it is awarded. There will be a report on each agreement or contract, and it will be public. We’re going to intensify what we do in the municipality.

How will you strengthen local businesses and attract investment?

The economies that grow are those that export. We have to place ourselves into the economic currents of the world. To do that, we need permission (from the US), but I think there are opportunities for expansion. If we create a synergy so that business deposits are in the local bank and that helps finance industrial projects, with the new federal Internal Revenue Code vision to bring manufacturing back, it can help us.

Pedro Pierluisi Urrutia

New Progressive Party candidate for governor

How will you offset the economic crisis caused by COVID-19?

Hay que agilizar los proyectos de reconstrucción e infraestructura con fondos federales ya asignados, poniendo a correr el dinero, lo que tendrá un efecto positivo en la economía. Tenemos que insertarnos de lleno en la economía de EE.UU., liderando esfuerzos del Congreso para reducir la dependencia de EE.UU. en la manufactura en el exterior, y enfocándonos en la internacionalización.

The government has to be agile in issuing permits, diligent in monitoring, and stop imposing restrictions on the private sector. Reconstruction and infrastructure projects need to be expedited with already allocated federal funds, putting the money to work, which will have a positive effect on the economy. We need to insert ourselves fully into the U.S. economy, leading congressional efforts to reduce U.S. dependence on overseas manufacturing, and focusing on internationalization.

What is your position on the agreements between the Board, PREPA’s creditors, and the government?

We live in a Puerto Rico that is different from the one we had when those agreements were made. It is necessary to return to the negotiation table with our creditors to achieve the transformation of PREPA, without an increase in the cost of electricity, and make economic growth viable.

The same goes for central government creditors. We need to reduce the debt to a sustainable level and without affecting pensions.

Will you accept the proposals and newly certified adjustments to the fiscal plan?

The fiscal plan is a living document. Postponing the cuts proposed by one year is not enough. We must ensure that it reflects the priorities of our people. I will make sure that we have the employees we need in all government agencies, that municipalities have the resources to provide the essential services the people need, that the pensions of our retirees are guaranteed, and that the UPR does not suffer any further cuts.

What is the main strategy in economic terms?

The economic development strategy has to be multi-sectoral. I will make sure that federal funds for Hurricane María, the earthquakes, and the pandemic are properly invested. I will make the government a promoter and facilitator of economic development, with special attention to SMBs, seeking the best possible tax treatment. I will promote the sectors with the greatest potential, such as manufacturing, tourism and agriculture, and the development of Roosevelt Roads.

How will you address problems with the use of federal funds and the island’s credibility in Washington?

You win credibility through actions. I have a track record of success at the highest level in D.C., and I will be very present in Washington to ensure that we are treated accordingly. Delays in the disbursement of funds are related to the lack of management, administrative capacity, and discriminatory requirements due to our colonial status. One of my priorities is to restore the administrative capacity of our government.

What will you do to strengthen local companies and to attract foreign investment?

Reducing administrative costs is going to help the small and medium-sized businesses, so we have to carry out a reengineering of how to do business on the island, advancing in the World Bank’s competitiveness indexes. Sustainable development protects the environment and fights climate change. We must mitigate damage to the coasts, redevelop urban areas, and promote renewable energy along with the transformation of PREPA.

César A. Vázquez Muñiz

Proyecto Dignidad candidate for governor

What measures will you take to offset the economic effects of COVID-19?

The federal government has allocated funds to prevent the collapse of our economy in the short term, but in the medium and long term, we must seek private investment in all sectors of the economy. Communities and small and medium-sized entrepreneurs must be empowered to take advantage of the available funds. I have also proposed to amend the federal Internal Revenue Code to leave behind our tax disadvantage treatment as a foreign territory.

What is your position on agreements with PREPA and central government bondholders?

Since September 2019, I have warned that the agreement in PREPA is detrimental to families and to the future of Puerto Rico. PREPA’s assets must be reassessed to know their true value and negotiate a greater cut. As for the agreement on the general bonds, Proyecto Dignidad understands that the Board and bondholders have to negotiate based on the ability of Puerto Ricans to pay.

Will you accept the fiscal plan that the Board recently certified?

I don’t like the idea of an Oversight Board, but I’m not going to lead Puerto Rico into further economic and social destruction because of ideological issues. With the Board, you have to work, face to face, with the truth, but you have to work with it. In the fiscal plan, the Board proposes that Puerto Rico can pay about 35 cents on the dollar. From my perspective, that is still overvalued; sitting down to negotiate with the Board and the bondholders you can obtain an agreement according to our reality.

What is your main economic proposal if you get to La Fortaleza?

A reengineering process of the government, healthy governance, and honesty in the management of funds. Our project focuses on six points: amendments to the federal Internal Revenue Code; restructuring PREPA; thinking of the island’s ports, maritime, and air network as a hub in the region; strengthening water supplies; reconfiguring the road and transportation networks and agriculture as a food security strategy.

How will you restore the island’s credibility?

The government has to function as a partner of the people and ensure that the money reaches families, communities, businesses, and entrepreneurs. It has to delegate funds to municipalities that have done a good job managing a significant amount of funds to ensure a better use. The distribution will not be partisan but based on quantifiable execution metrics. This should be combined with strategies to avoid arbitrary changes in projects and the use of funds.

What will you do to strengthen local entrepreneurship and foreign investment?

We cannot look to the past for what was Section 936. I do believe that Puerto Rico deserves a fairer deal while deciding its status. In addition to initiatives in favor of local entrepreneurs, there is a need to reduce the Global Intangible Low-Taxed Income (GILTI) by 50 percent to the tax rate paid annually by these companies and a reduction of the Base Erosion Anti-Abuse Act (BEAT) by 50 percent.

Carmen Yulín Cruz Soto

Popular Democratic Party candidate for governor

How will you offset the consequences of COVID-19?

You don’t have to wait to get to La Fortaleza to take action. I’m taking steps to inform Judge (Laura Taylor) Swain of the consequences of her decisions. We’re going to report on the effect the pandemic is going to have on municipalities. We are in conversations so that the next aid package from Congress comes with funds allocated to each municipality, allocated through a formula that deals with the population, poverty, and unemployment.

Will you accept the Board’s fiscal plan?

I’m going to be opposing it. We have to open a communication space where Puerto Rico is respected. For those who say that the Board came to help with economic development, how is it that we are distributing 2,200 purchases in San Juan for the people who need them? We have to get rid of the Board, and that is done with good connections in Washington.

What do you have to say about the agreements with bondholders in PREPA and the central government?

The debt must be audited. In San Juan, I audited it and we were able to cut $30 million out of $154 million. The Board says you can’t pay the debt as it is, but that’s not the point. The U.S. forgave debts to countries that attacked the nation in World War II, bailed out Wall Street, and now the airlines. I don’t want a bailout for Puerto Rico. I want justice for the people, for pensioners, for those who died in the war. It is not royalty, it is a retribution for the contributions Puerto Rico has made to that country.

What is your main economic strategy if you are elected?

Progress is for everyone or it is not progress. It is not about reducing poverty, it is about eliminating it. In Puerto Rico, incentives represent twice of what goes into the Treasury. We are going to eliminate Law 22 (of 2012) and modify incentives so that they are tied to what that company shares with Puerto Rico. We will promote renewable energy, tourism, agriculture, encourage nonprofit organizations, and spread development strategies throughout the island.

What will you do to restore credibility in Washington?

A leader can’t have the fingers tied with anyone, it has to be someone who has certainly not been anyone’s lobbyist, and La Fortaleza´s agenda will be that of the people. Motu proprio, we must be accountable, but we must remind the United States that they also have their cases of mismanagement, not as an excuse, but because it also happens with people close to the President who have gone to jail for mismanagement. It’s a combination of accountability, contacts, and not using resources for partisan political purposes.

What will you do to encourage local businesses and foreign investment?

The government must create the conditions to promote development, encourage the cooperative model, and give more access to SMBs in government contracts. We are working, something that Aníbal is also doing with (Congressman) Raúl Grijalva, to bring incentives, especially for pharmaceutical companies, so that Puerto Rico recovers its place, and the United States addresses the challenges it has in supplying its needs in this hemisphere.

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