Puerto Rico’s General Fund revenue was 22.8% ahead of projections through the first seven months of the fiscal year, raising hopes that there will be more money to pay bondholders as the island's debt is restructured.
The improvement, reported by the Puerto Rico Treasury, is relative to the original June 29, 2018, budget projection for revenues through the end of January.
Because the economy was stronger in 2018 than had been projected in the aftermath of the summer 2017 hurricanes, the Puerto Rico Oversight Board made new revenue projections on Oct. 23. The General Fund was ahead 2.8% of these projections through the fiscal year’s first seven months.
The month of January’s revenue was 35.6% above the original projection and 3.4% above the revised projection.
According to the Economic Development Bank for Puerto Rico the economic activity index rose 7% in January from January 2018.
In the fiscal year’s first seven months the category with the greatest exceedance over the original projections was corporate income tax revenue ($351.7 million). This was also the category that showed the greatest overshoot over the revised projection ($90.9 million).
In January the tax types with the greatest excess over the original projection were the sales and use tax ($82.8 million) and individual income tax ($57.1 million).
The sales and use tax that enters the Puerto Rico Sales Tax Financing Corp. (COFINA) in the early part of the fiscal year, stopped contributing to COFINA in January 2019, when the pledged amount was reached, but didn’t stop contributing to COFINA until February 2018, because that is when the pledged amount was reached. Puerto Rico Secretary of the Treasury Raul Maldonado Gautier said this explained the $94 million greater sales and use tax amount in January 2019 compared to January 2018.
Through the first seven months of the fiscal year there was $5.116 billion in net revenues to the General Fund, 21.4% more than in the first seven months of the previous fiscal year, which was depressed by the hurricanes.
