SHARE
This Summer in Puerto Rico, there has been a lot of fanfare around superstar Benito Antonio Martínez Ocasio, better known as “Bad Bunny,” and his concert residency in San Juan. We’re borrowing the title of one of his albums to open this message: “nadie sabe lo que va a pasar mañana,” which translates to “no one knows what tomorrow will bring.”
And while we remain optimistic about what we can achieve for Puerto Rico’s future, there are still many unknowns surrounding our energy infrastructure, our public debt outlook, and the overall direction of our economy. Below, we provide insights into these crucial developments.
Congressional Hearing on PROMESA: Nine Years Later
It has been a long nine years. As Sergio points out, “The implementation of PROMESA, like most complicated federal legislation, has been a mixed bag.”
While the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) has helped reduce Puerto Rico’s public debt by approximately $42 billion, the restructuring process has been slower and more costly than expected. Puerto Rico has also implemented better financial reporting and oversight, but much work still lies ahead. Critically, the restructuring of the Puerto Rico Electric Power Authority’s (PREPA) debt is still pending, delaying crucial investments in energy infrastructure and renewable generation. Moreover, the process of fiscal oversight, originally anticipated to conclude by 2022 at a cost of $370 million, continues today, now exceeding $2 billion.
A significant concern remains: the local government’s inability to develop a comprehensive economic growth strategy and establish fiscal discipline, risking future financial instability. Although the Financial Oversight and Management Board (FOMB) has introduced improved budget transparency, Puerto Rico still lacks timely financial reporting, and the transfer of knowledge and skills from external consultants to government officials remains inadequate. To meet the conditions for ending FOMB oversight, Puerto Rico must prioritize stronger financial governance and a proactive economic growth agenda. As recommended by CNE in February 2016, Puerto Rico should implement a fiscal responsibility law that limits tax-supported borrowing, ensures sustainable debt management, and mandates pay-as-you-go budgeting practices. Such a rule would provide a strong safeguard against repeating the financial mistakes of the past and support long-term economic stability.
The Rum Cover-Over: Hidden in Plain Sight
While it didn’t make headlines during the debate over the massive reconciliation package, the rum excise tax cover-over was quietly inserted into the final Senate language, funneling around $200 million a year into Puerto Rico’s General Fund. At a time when conversations in D.C. are focused on PROMESA and austerity, this often-overlooked funding stream offers a real opportunity to put our fiscal house in order. It’s not billions, but it’s precisely the kind of revenue meant to support economic development, and that could help Puerto Rico build long-term financial resilience.
In our latest policy brief, we break it all down: the origins of the rum cover-over, how the money flows, where it goes, and how to make the most of it.
Spoiler alert: CNE proposes an innovative alternative: the creation of the Puerto Rico Economic Development Fund for the 21st Century (PREDF), modeled after Alaska’s successful Permanent Fund.
ICYMI: Conversatorio CNE
CNE recently hosted “Conversatorio CNE: Energía e industria para un futuro sostenible,” a conversation that brought together leading voices to examine how a well-designed industrial policy and a reliable, affordable energy system can unlock new opportunities for Puerto Rico.
The event began with a compelling presentation by Enrique Figueroa Grillasca on Puerto Rico’s position in the global economic complexity index. Harold Toro and engineer Lucy Crespo then discussed the island’s industrial capabilities, its innovation potential, and the key role the private sector can play in driving development. Sergio M. Marxuach then presented an overview of the status of Puerto Rico’s energy puzzle, setting the stage for a candid dialogue with energy expert and professor Luis Aníbal Avilés. Together, they unpacked the systemic barriers to reform, offering bold ideas and clear calls to action.
CNE in the News
- Industriales – Entre lo urgente y lo importante: ¿Asoma un “mapa del tesoro industrial”?
- OENEGÉ – “Necesitamos una nueva manera de pensar el desarrollo de Puerto Rico”
- El Nuevo Día – Centro para una Nueva Economía: “Time to seriously consider winding down the Board’s operations”
- Noticel – Llamado a que la Junta se ponga para su número con proyectos críticos de energía
- El Nuevo Día – “Una situación donde nada se mueve”: frenos en la regulación paralizan la transformación del sistema eléctrico
- El Vocero – Casi una década de una Promesa sin cumplir
- Univisión – Puerto Rico busca renacer económico con farmacéuticas y contratos de defensa