Pretty good article on the VI economic/debt situation in the NYT business section today
A link for those who would like to read it.
another article published today with a different outlook:
That guy that wrote 2nd article could have a job with VI govt so quick...... Very delusional outlook
This spin master fits the profile perfectly.
He also makes some suggestions for future revenue enhancements through taxation. Mentions low property taxes and low business excise tax. I am sure Mapp will reach out for this option soon.
There is a difference between VI bonds, which are secured with future revenue from rum cover-over funds from excise taxes collected by the US, and Puerto Rico's general obligation bonds secured by future tax collection from PR businesses and citizens. This makes no difference now, though, since the bond market doesn't recognize this.
The VI government has a $133 million structural deficit it needs to fill this fiscal year now that more bond funding is out of reach. Taxes will go up, services will be reduced. We'll see what the threat of PROMESA does to force government changes. Will corruption slow?
In theory, LT bond obligations will be paid by the rum cover-over.
GERS is going to be the big loser. Hospitals, too, once Medicaid is less available because of changes in DC.
Kicking the can down the road is not a possibility anymore.
Once again, if the government did more to keep Hovenza up and running, our economy wouldn't be so deep in the hole.
Hopefully the rumors of Limetree's efforts are true and more decent paying jobs will start returning.
Tourism alone isn't going to pull us out of this, St. Croix especially.
Probably not a lot.
1. Venezuela the 50% partner in the joint venture and the source of the oil was going broke and could not afford to cut price of crude being sold to the joint venture particularly since China was supposedly willing to buy the oil at market.
2. Glut of natural gas in US made it possible for refineries in Gulf coast states to refine crude using NG instead of more expensive oil. In addition the heavy crude from Venezuela was more costly to refine.
3. At least half of refinery's equipment was obsolete.
The only thing in hind sight that could have been done was the VI's government to have had a more supportive and less adversarial relationship with Hess and the refinery but even then global economics would have dragged the refinery down.