Puerto Rico’s government has frozen spending by departments at 5% less than allotted in the budget, in a bid to limit overall spending to what it believes to be necessary.
In the early months of his tenure as governor, Ricardo Rosselló said he was introducing “zero-based budgeting” whereby department heads would have to justify every government program and every dollar spent on programs. Puerto Rico chief financial officer Raúl Maldonado said the governor's administration has introduced the 5% program in the same spirit of careful spending.
Puerto Rico has been in an open fiscal crisis since at least mid-2016, when it stopped paying its general obligation debt.
The government is starting with the 20 largest departments this month. Next month it will introduce the same practice for the remaining departments, Maldonado said.
“The goal is for the agencies to comply with the zero-based budget on a monthly basis,” he said. A zero-based budget is one where departments have to justify every dollar spent.
The first month of the 5% freeze has been a success, he said.
The practice will continue through at least December. At that point, if financial controls have been introduced and the spending seems to be contained, then the government will release the 5% to the departments.
Prior administrations didn’t have monthly budgets for departments, Maldonado said.
Along with being chief financial officer, Maldonado is also the Secretary of the Treasury.