Puerto Rico's latest latest delay in submitting a fiscal plan is raising concern among officials and analysts that Hurricane Maria's damage to the economy is worse than previously thought.

On Wednesday the Puerto Rico Oversight Board said that since the plan for the Puerto Rico Electric Power Authority wasn’t ready to be submitted, as had been requested, neither the Puerto Rico central government fiscal plan nor the Puerto Rico Aqueduct and Sewer Authority fiscal plan should be submitted. The board postponed the deadline for the submission of the plans to Jan. 24.

Puerto Rico Sen. Minority Leader Eduardo Bhatia Gautier denounced the secrecy around the budget's preparation.
Puerto Rico Senate Minority Leader Eduardo Bhatia said that Gov. Ricardo Rosselló should make the fiscal plan public immediately.

On Friday Moody’s Investors Service released a report saying, “These repeated delays in revising Puerto Rico’s fiscal plan … underscore the economic uncertainties that Puerto Rico faces as a result of post-Maria factors including surging migration to the U.S. mainland, potentially unsustainable operating conditions for the territory’s manufacturers, and the federal recovery and rebuilding assistance that may fall short of what Puerto Rico needs to prevent lasting and severe damage to its economic base.”

“Together, the growing challenges from these factors may further reduce already low recovery prospects for holders of Puerto Rico’s 17 rated debt types,” wrote Moody’s senior credit officer Ted Hampton and three other Moody’s professionals.

Amplifying on the argument, the authors say that at least 200,000 Puerto Ricans have left the island since Hurricane Maria, or about 6% of the pre-Maria population. The emigration will hurt the island economy. Further, the movement will “bolster arguments in favor of slashing bondholder claims during the current judicial process to restructure the commonwealth’s debt.”

Moody’s noted that manufacturing, an important part of the island’s economy, has been steadily smaller employer since 1996. After Maria some manufactures may decide to move to other areas less likely to be hit by future hurricanes. The U.S. government’s new 12.5% excise tax on profits derived from patents and other intangible assets is another negative, the Moody’s analysts wrote.

Finally, the authors said that the amount of federal aid for the island in the aftermath of Maria will affect the island’s recovery trajectory. Rosselló has asked for $94.4 billion in aid. The analysts said it is unclear whether the federal government will approve this.

The federal government has failed to disburse any portion of a $4.9 billion Community Disaster Loan to Puerto Rico. Congress approved the money for Puerto Rico, the U.S. Virgin Islands, and some other jurisdictions hit by recent natural disasters. On Jan. 9 Reorg Research said Puerto Rico’s debt restructuring and arguments between the U.S. Treasury and Puerto Rico over the latter’s control of the funds has delayed the funds’ release.

The Trump administration has promised to approve additional aid for the island. Federal medium and long-term aid may be part of a budget deal next week to avert a government shutdown.

On Thursday Puerto Rico Sen. Minority Leader Eduardo Bhatia brought up a different concern about the fiscal plan's delay. He tweeted to Gov. Ricardo Rosselló, “this is your great opportunity to regain lost confidence.... Make your fiscal plan public today so that there is no doubt, the people know your proposal and participate in the reconstruction of Puerto Rico.”

Bhatia said the people of Puerto Rico deserve a chance to comment before the draft is submitted to the Oversight Board.

“In all countries of the world, ideas are discussed before decisions are made, not later,” he wrote. “Otherwise, the process is a mockery of the serious people of Puerto Rico who want to contribute to the common good.”

Once the plans are submitted, the board plans to review and revise them.

Wednesday’s delay was the board’s second delay. The board originally directed the local government to submit a revised plan on Dec. 22.

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