Hurricane Maria has thrown Puerto Rico’s already messy economic recovery plans into disarray.
For now, the focus has shifted from Puerto Rico’s financial woes to meeting the basic needs of its 3.5 million people, many of whom still lack adequate food, water and power more than a week since the Category 4 hurricane laid waste to the U.S. territory. But as Puerto Rico emerges from the worst of the disaster, it will still face a $74 billion public debt load and a decade-old economic recession that has sent hundreds of thousands of islanders fleeing to the U.S. mainland.
The hurricane has interrupted court proceedings and mediation efforts with creditors aimed at restructuring the debt. The destruction will severely disrupt revenue flows and force a recalculation of a fiscal plan, painfully negotiated with federal oversight board appointed to oversee Puerto Rico’s finances. While there is some potential for federal recovery money and insurance payouts to jolt a stagnant economy, much depends on how much aid Congress will approve.
President Donald Trump on Friday promised the rebuilding effort “will end up being one of the biggest ever.” With so many unknowns, however, economists are unsure if there will be any silver lining for Puerto Rico.
“Generally, what we find is that natural disasters are just temporary problems and in most cases after the rebuilding, things revert to the long-term trends,” said David Hitchcock, an analyst with S&P. “Unfortunately, the longer-term trends already weren’t very good.”
Here are some things to watch as Puerto Rico confronts the dual challenges of natural disaster and economic chaos.
FISCAL RECOVERY PLAN IN LIMBO
Puerto Rico’s efforts to put its finances in order were mired in controversy, lawsuits and street protests. Now, the island must rethink everything. The oversight board appointed by Congress approved a 10-year spending plan in March that chipped away at the government’s debt load while cutting employee benefits and…