Puerto Rico reported that the liquidity position of the Government Development Bank of Puerto Rico improved $105 million in January, while General Fund revenues came in $19 million short in the same month.
After the GDB paid a note for $280 million that matured on Feb. 1, the bank reported Tuesday, it had $1.194 billion in net liquidity. This latter figure was $105 million better than the $1.09 billion that the GDB ended with on Dec. 31.
The GDB's net liquidity position declined by nearly 30% in December. The position on Feb. 1, after paying off the note, was up 9.4% from the Dec. 31 position, the bank said.
Moody's Investors Service last month voiced concerns about the GDB's "dwindling" liquidity level in December, saying in a statement to The Bond Buyer that a failure to sell a planned bond for Puerto Rico Infrastructure and Finance Authority "would imperil Puerto Rico's already precarious financial position."
Melba Acosta Febo, president of the GDB, has said that in the next few weeks Puerto Rico will sell a large bond from the Puerto Rico Infrastructure and Finance Authority. One of the primary purposes of this bond will be to improve the GDB's liquidity position.
Separately, the Puerto Rico Treasury announced that General Fund net revenues came in 2.6% short of budget.
Non-resident withholdings came in $109 million above budget and individual income taxes came in $26 million above budget. The biggest shortfalls came with the sales and use tax revenues that came in $55 million short and the foreign corporation (Act 154) revenues that came in $54 million short.
Treasury Secretary Juan Zaragoza G-mez said that revenues have come in 2.5% below budget projections through the first seven months of the fiscal year but that Puerto Rico is taking measures to make sure that revenue comes in as budgeted. Last week legislators from Puerto Rico's governing party introduced a major tax reform bill in the Puerto Rico House of Representatives. As part of this bill, they included a preamble that would allow pre-payment of a special tax on certain transactions in the current fiscal year.
Taxpayers will be allowed to pay at a reduced rate taxes on corporate dividends for future distributions of accrued benefits and profits. The preamble would also provide an incentive to pay debts for income, estate, gift, excise, and sales and use taxes, as well as employer withholdings. It provides an incentive for voluntary disclosure of income and the payment of corresponding taxes.
The deadline to benefit from these incentives and to make payments will be June 30, the end of the current fiscal year.
"In addition to promoting tax compliance, these measures will provide the General Fund with additional funds," the Treasury said in a press statement.
