Puerto Rico Gov. Alejandro García Padilla said he is preparing a budget with little or no deficit for the coming fiscal year.
García Padilla said Friday that the ratings agencies had asked him to try to achieve a balanced budget in two years but that he wants to do it in one. He said he is working on a budget with little or no deficit for fiscal 2015, which starts July 1, 2014.
The Puerto Rico government has run operating deficits more or less continuously since 2000.
When the governor came into office in January 2013 the government said the government was on track for an operating deficit of $2.2 billion in that fiscal year, which ended June 30, 2013. García Padilla and his administration took measures to reduce the actual operating deficit for fiscal year 2013 to about $1.3 billion.
At the end of June the government adopted a fiscal year 2014 budget with an $820 million deficit, or 7.9% of spending. In the first six months of the fiscal year revenues were somewhat ahead of expectations and spending for the first five months was somewhat lower than budget.
Because of this the government expects to meet or beat the projected $820 million deficit.
In July interim president of the Government Development Bank of Puerto Rico José Pagán told The Bond Buyer that the government intended to pass a balanced budget for fiscal year 2016, which starts July 1, 2015.
In early January Puerto Rico Secretary of the Treasury Melba Acosta Febo told The Bond Buyer that the government planned to reduce the size of the deficit only a little, if at all, in the coming fiscal year.
Since then GDB Chairman David Chafey has said that the government plans to substantially cut the deficit in the coming year's budget.
Garcia's statement Friday represents an acceleration of the previous timetable for balancing the budget.
All three ratings agencies have Puerto Rico general obligation bonds at their lowest investment grade rating and all three have placed the commonwealth on formal warning of a possible downgrade.
On Friday the governor said that the ratings agencies had brought their concerns to him at the start of 2013 and that he had addressed all of them. He affirmed that his government would sell bonds soon to improve its liquidity.
