June 15, 2021

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They do intense work to set up the new budget | government


The Office of Management and Budget (OGP) and the Department of the Treasury are working hard to have a budget proposal in three weeks that will convince the Fiscal Control Board of the expectation of expenses, which has given them until January 29 for the delivery of the document.

The working hours have been redoubled in both public agencies, while they wait for the draft budgets of the different agencies. The projection is to have a budget charged to the General Fund that could be similar to what the fiscal board approved for the current year that expires June 30, of around $ 10 billion. The consolidated budget with special and federal allocations, on average, is around $ 22,000 million.

THE SPOKESMAN spoke separately with the new director of the OGP, Juan Carlos Blanco, and with the Secretary of the Treasury, Francisco Parés, who are entrusted by Governor Pedro Pierluisi to set up a draft in tune with the reality of income and expenses that this allows .

During the past four years the fiscal board did not endorse any of the budgets presented and the Puerto Rico Supervision, Administration and Economic Stability Act (Promesa) requires that there be four that are balanced in consecutive years.

Blanco understands that he has a “very short” calendar in his hands, but assures that he has no doubts “that we are going to deliver that draft on January 29 and it will be the result of a well thought out work that will require a lot effort”.

“Here the most important thing is continuity. We have kept that schedule from the past administration because there is no time to stop and start over here. There are spending goals and we are working with all agencies and heads of agencies to make sure that the budget is analyzed and the information is entered into the system, ”he said.

He added that the starting point is the expectation about the economic activity and the collections that this will allow to take to the Treasury box. Being clear that “there is a high level of uncertainty still due to the pandemic.”

Controversial points on the table include pensions, health spending and the pandemic, and the broad government structure.

Trust the precautions

The Secretary of the Treasury mentioned that the fiscal board is the one that has the legal authority to make the income projection “and based on that, the budget is made. It may be that the board recalibrates its projection and revises the current projection ”, due to everything that is happening.

However, when looking at the Treasury numbers at the beginning of the fourth quarter of 2020, Parés understands that “with the performance we had, we feel confident that we will exceed the projections and that is an extremely positive indicator, and for the fiscal year the collections they should not be a matter of concern for budget implementation ”.

What Parés refers to is that after the downward adjustment in economic activity and in the projection of income last year, a little more money than expected reached the treasury.

Important federal funds

In the midst of the fiscal crisis and the general disruption produced by the Covid-19 pandemic, the arrival of funds for the recovery from the earthquakes and the federal stimulus appropriations for the health emergency, have become the cushion to cushion the tax coup.

“We have very optimistic projections, particularly if we manage to unlock the federal funds that are expected to be disbursed,” added Blanco, and stated that “for budget purposes we are seeing projections quite similar to what we had last year.”

The impact of Covid

The director of the OGP highlighted that in addition to direct work with the Treasury, this time they include the Department of Health, since the projection of the goal of achieving mass vaccination will affect economic activity and the recovery of sectors such as commercial, entertainment and in a longer term, tourism.

Parés agreed that the issue of health is decisive because it was what caused the significant drop in collections between April and June 2020, when barely a quarter of the average entered for the first of the months in that period, due to the ‘ lockdown ‘.

“We are fully aware that in the way the budget is used it is also a mechanism for economic development; all agency heads have to use the budget well. Every time a utility bill is found and payment is not issued, we are really affecting the private sector and these are not luxuries that we can afford at this time, ”warned the Secretary of the Treasury.



Juan Carlos Blanco

There is work to be done and build this constructive relationship with the fiscal board with a professional dialogue and the same goal that Puerto Rico move forward. Juan Carlos Blanco, OGP Director


Once the government delivers the draft budget on January 29, there will be a period of several months of analysis and conversations during which the fiscal board will make recommendations and make decisions. There is also the part that the legislature has to approve.

“We are going to be firm and respectful and we are going to have a constructive dialogue. We are aware that we have a responsibility with which we are going to fulfill ”, pointed out Blanco.

Will the balanced budget be achieved?

Both officials were asked if there is the environment and willingness to start producing a balanced budget, as required by Promesa.

“There is still work to do and build this constructive relationship with the fiscal board with a professional dialogue and the same goal that Puerto Rico move forward,” answered Blanco, adding that “the exercise of making a budget is annual, but the project government should be multi-year … the way we use resources this year is not isolated from plans that will be taking place in three, four, or five years ”.

He stressed that the greatest responsibility lies with the agencies and that they can comply with the delivery of their drafts. “The governor has asked them to do a real analysis to see what spending is necessary and which one is giving the best return to those resources that they have available,” said Blanco.

Meanwhile, Parés understands that “this budget is going to be the governor’s letter of introduction, who observes the best interests of Puerto Ricans and according to the needs of the agencies.” It is clear that it is an obligation to produce a balanced budget, because —among other issues— “there is an aspect of debt service that the government of Puerto Rico will eventually have to respond to”.



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