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Puerto Rico Faces Financial Disaster—There Is No Economy Left

Oct. 11, 2017 (EIRNS)—Puerto Rico’s Treasury Secretary Raul Maldonado told El Nuevo Día that the government will face a shutdown by Oct. 31 if Congress doesn’t intervene with additional funding.

In effect, there is no economy. Few businesses are operating, and therefore, people aren’t getting paid. Banks operate four hours a day. The official 12% unemployment rate will soar. McClatchy News Service also reports that the mainstay of the economy, agriculture, was devastated by hurricane Maria, with losses expected to top $2 billion, according to Agriculture Secretary Carlos Flores.

On the healthcare front, the island faces an immediate Medicaid funding crisis, The Hill reported Oct. 9. Funding is expected to run out by year’s end, and unless Congress acts to restore it, close to one million people will lose coverage. Note that, since Puerto Rico, like all U.S. territories, doesn’t pay federal income tax, federal spending is capped, so the island only gets between 15 and 20 percent of total Medicaid costs paid; the bankrupt government has had to pay a large portion from its own budget to cover Medicaid costs.

Nelson Morales, head of the Puerto Rican Electric Power Authority (PREPA), told El Nuevo Día that without aid from the Federal Emergency Management Agency (FEMA), the U.S. Army Corps of Engineers (USACE), or both, it will be impossible to restore full power to the island. PREPA only has $500 million on hand, which is nothing compared to what’s required to rebuild the system. Yesterday, FEMA and the USACE said they had contributed $54.6 million and $115 million, respectively, to assist PREPA, which still a drop in the bucket. Sources told the daily that PREPA will need at least $3 billion, and that is probably a low estimate, given that the entire power system really must be built from scratch.