NEW YORK - Standard & Poor’s revised its outlook Monday on Puerto Rico’s $9 billion of general obligation debt to positive from stable in response to austerity measures the commonwealth has undertaken to end its structural deficits by fiscal 2013. The measures include spending reductions and revenue enhancements.
The rating is BBB-minus.
Since taking office in January 2009, Gov. Luis Fortuño has slashed Puerto Rico’s payroll by 17%, implemented a property tax, increased corporate and income taxes, and reduced government spending to address its recurring budget shortfalls.
Puerto Rico will use $1 billion of sales tax bond proceeds to help balance its budget for fiscal 2011, which began July 1. That deficit borrowing is smaller than the $3 billion officials used in fiscal 2009 to meet budget expenditures.
“The outlook revision is based on our view of the commonwealth’s recent implementation of significant expenditure controls and revenue enhancement measures that we believe could help restore budget balance within the next two years,” Horacio Aldrete, an analyst at Standard & Poor’s said in a statement.
Standard & Poor’s also rates the commonwealth’s appropriation debt BBB-minus. The outlook is stable “because even if the GO rating is raised in the next two years, the appropriation rating would remain one notch below the GO rating.”
