Trump has decided to take a stand against the Board that manages Puerto Rico's finances.
Puerto Rico's finances have been a problem for a long time, but its problems were radically exacerbated by Hurricane María in 2017. In recent weeks, US President Donald Trump has taken a strong stance on the financial management of this free, unincorporated state by removing six of the seven members of the Financial Oversight and Management Board, causing a major stir on the Island. The Board, which is composed of seven members appointed by the US president, has been in charge of reviewing the Puerto Rican government's budgets with the aim of reducing public debt, which exceeded $70 billion, along with $55 billion in unfunded pension liabilities, and ensuring the island's fiscal responsibility and financial stability.
Trump's decision comes amid strong criticism of the Board, which has been accused of inefficiency and excessive spending, both in the United States and in Puerto Rico. The news has received widespread coverage and the Latin American expert, Maria Anastasia O´Grady, published an interesting piece in the Wall Street Journal explaining the topic, and talking with the academic Ángel Carrión Tavárez, another friend of Mirada Sur. So, we cut to the chase and asked Ángel what is happening in Puerto Rico.
“The dismissal of almost all its members paralyzes the Board's deliberative capacity, which depends on internal votes to certify fiscal plans, approve budgets, and negotiate debt agreements. This mass dismissal not only alters the internal dynamics of the Board, but also reopens the debate about its colonial profile, legitimacy, and effectiveness in Puerto Rico's fiscal governance.”
According to Angel, "President Trump has the prerogative to nominate new members, but his appointments require interaction with Congress. Depending on the profile of the nominees, we could expect an ideological and focus redefinition of the Board, as well as greater fiscal and political pressure on Puerto Rico.” Part of the inefficiency for which the Board is accused is due to its inability to transform deeply rooted structures. As Carrión Tavárez explains: “The problem is not only technical, but cultural. The Board has clashed with an economic and political culture that favors short-termism and resists structural change. Without a broad and profound institutional and public policy transformation based on economic freedom, solutions to Puerto Rico's problems will continue to face obstacles."
This article was originally published in Spanish by Mirada Sur.
