Puerto Rico's increased oil tax is providing some help to its Government Development Bank, which may help ease an anticipated November cash shortfall for the government.
The government adopted the increase in oil taxes per barrel to $15.50 from $9.25 in March. It had planned for the Puerto Rico Infrastructure and Finance Authority to sell a $2.95 billion bond backed by this increase. It turned out PRIFA couldn't sell the bond at what the government considered reasonable terms, as yields on Puerto Rico debt rose.
In late March the government sold a $246 million bond anticipation note to RBC Capital Markets, with interest to be paid from the oil tax increase.
The rest of the revenue is pledged to the GDB, a bank spokesperson said. Some of the money is being used to repay the Puerto Rico Highways and Transportation Authority's debts to the GDB. The GDB is letting the PRHTA use some of the money to support its own operations.
The GDB's liquidity stood at $778 million as of May 31. In mid-August Puerto Rico chief of staff Víctor Suárez Meléndez said the GDB's liquidity had improved in recent weeks.
In late August Puerto Rico released a report by consulting firm Conway MacKenzie projecting that Puerto Rico's central government would run out of money without an infusion of money from the GDB, an outside bank, or some other lending entity. On Sept. 17 the El Vocero news website quoted Puerto Rico Secretary of the Treasury Juan Zaragoza reiterating the possibility of November cash shortfall.
Some of the oil tax revenue is going to the GDB, which has a mission to support the government in financial crises and may be called on to do so in November and December.
The GDB has $4.63 billion in bond debt, 97.2% of which is uninsured. The HTA has $6.1 billion in bond debt, of which 39.3% is uninsured.
In other Puerto Rico news, on Thursday Puerto Rico Secretary of Public Affairs Jesús Manuel Ortiz said the government may not meet an Oct. 1 deadline for the submission of legislation connected to its Fiscal and Economic Growth Plan.
In July Gov. Alejandro García Padilla issued an executive order that a plan be created to deal with Puerto Rico's fiscal and economic problem. A governor-appointed group released the report on Sept. 9. The original executive order said legislation stemming from the report should be introduced by Oct. 1.
On Thursday Manuel Ortiz said the governor may extend this deadline for some of the legislation.
