Elías Sánchez: 'There Is No Such Thing' as Balancing the Budget in Two Years
For the Governor's representative in the Fiscal Control Board (FCB), Elías Sánchez, 'there is no such thing' as balancing the budget in two years, like the FCB asked for.
The Board recommended closing the budget deficit gap and established that it has to be done in a 'once and for all' fashion, a term that was very much used during the board's meeting on January 28th.
'In the context of the Fiscal Plan, it refers to the goal that we have a 'once and for all' balanced budget by fiscal year 2019,' said Board spokesperson José Luis Cedeño in a written statements to NotiCel. In a 10-year span, balancing te budget would amount to each middle-income household paying some $5,400 yearly, an amount that would more than triple if the payment term is shortened.
'By way of example, all cuts and reforms would have to be done by fiscal year 2019,' Sánchez told NotiCel. However, he said that it is not clear what the term means and they have argued that the central government does not agree that everything has to be adjusted in such a short time. 'Once and done,' there's no such thing as 'once and done'. This is something that is fluid, the numbers are going to change, and the plans are going to have to be revised, so for me there is no such thing as 'once and done',' he stated.
In an interview with NotiCel published last week, Governor Ricardo Rosselló said he would ask the FCB for more time to implement the Fiscal Plan that his administration must deliver tomorrow. Then, over the weekend, he told Reuters he would ask for five years because doing it in two would lead to a 'devastating' blow to the economy.
As part of a presentation at its most recent public meeting, Board member Ana Matosantos defined what should be a sustainable solution. In the presentation at the Hotel El Conquistador in Fajardo, she clarified the points that should lead to shorten the deficit. 'The economy has contracted for the last 9 to 10 years, therefore, it is necessary to restructure the debt, but it is not the only solution and can not be the only measure to balance the budget,' she said.
'In the same way, the scope of the response to fiscal challenges must be proportional to the problem. The reforms will require a shared sacrifice, but they should protect the most vulnerable... Reforms must also focus on structural changes to promote growth and opportunity,' she added.
To implement 'once and done', the Board offered solutions that include necessary changes in the structure of the Government, in its expenses and in revenues. The aim is to achieve and maintain a balanced budget that adequately supports essential services. Also, when restructuring debt, a sustainable level based on a realistic income and economy must be reached. Matosantos added that changes in pensions should be 'sustainable' and be on track for adequate funding.
This Fiscal Plan to be presented tomorrow may be altered yearly since the Board explained that it will be 'dynamic', that is, that it will have to be revised as the months pass.