Governor: Winds tend to downgrade; says next budget will be balanced
The governor stressed that the fiscal “storm” that the island is weathering was already raging when he took office a year ago.
“We’ve been aware of this storm for some time,” García Padilla said. “Well if a storm comes I can’t avoid the wind, but we know how to make windmills.”
Moody’s Investor Service, Standard & Poor’s and Fitch Ratings all peg Puerto Rico’s GOs just one notch above non-investment grade. All three credit ratings agencies have warned of potential downgrades to junk.
Moody’s fired the first shot in mid-December, warning that a downgrade could come within 90 days as it pressured the Puerto Rico government to return to the capital markets. S&P and Fitch followed with similar moves.
“When I took office the bonds had already been downgraded with a negative outlook,” García Padilla said. “It is known that the tendency is toward a downgrade and that happened before I got here.”
García Padilla reiterated Friday that his administration has addressed “all of the demands” by the Wall Street credit rating agencies in trying to shore up the island’s shaky finances, pushing through aggressive fiscal measures including public pension reform, broad new taxes and belt-tightening as it scrambled to head off a downgrade.
“They asked us to deal with the pension system and we did so with urgency. They asked us to reduce the deficit, well we cut it by nearly 70 percent. They asked us to tighten up on spending, well we’ve spent less than forecast and revenues have topped estimates,” the governor said.
His comments came after taking part in the inauguration of a new pharmaceutical research & development center in Caguas.
García Padilla said he is aiming to present a balanced budget for fiscal 2015 or “one with as little deficit as possible.”
“The credit raters asked us to do that in two years, well I’m going to try to do it in one,” he said. “It’s too late to call for a recall. What he have to do is keep working and move the island forward.”