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8242471 3

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  • 1. Leadership in Times of Crisis Luis G. Fortuno October 2013
  • 2. Conditions at the Beginning of Term  Worst deficit in the U.S.  5 year local recession  Wall Street Meltdown/ Great Recession in the U.S.  Dramatic loss of local capital (housing and bank crisis)  Lack of liquidity in the banking sector  Bond rating one notch above “Junk”/ Limited access to the market  Government employee unions demands
  • 3. Steps Taken  Cut expenses by 20%  Streamlined permitting process  Merged/ eliminated government agencies  Cancelled collective bargaining rights for 2 years  Promoted 3 FDIC-assisted transactions  New tax code  Targeted incentives (exports, attract capital, tourism, film industry, R&D, housing)  Public-Private Partnerships
  • 4. We brought down the deficit by 90% FY 2009 2010 2011 2012 $(610) 2013* 2014* $(350) ? $(1,000) $(2,500) Expenses per revenue dollar $(3,306) 2009: $1.44 2012: $1.03 *estimate (amount in millions of dollars) 4
  • 5. First time on positive ground since 2006 Fiscal mismanagement GROWTH Stabilization Government Shutdown 0.5% 0.5% FY 2012 2006 2007 2008 2009 2010 -1.2% 2011 -1.5% -2.9% -3.4% -3.8% *estimate 5 ? 2013*
  • 6. Indicators showed improvement*  27,000 net jobs (last 14 months)  Housing sales: 13.4% (since Sept. 2010)  Vehicle sales: 6.6% (FY 2012)  Cement sales: 7.3% (FY 2012)  New corporations: 14% (FY 2012)  Retail sales: 2.2% (1st half 2012)  Bank deposits: 6.4% (2nd quarter 2012)  Unemployment: 13.8% (lowest since Dec. ‘08)  Bankruptcies: 10.4% (FY 2012) *by election day 6
  • 7. Improved Credit Ratings Baa1 BBB BBB+ Baa3 BBB- N/A 2008 2012 S&P 2008 2012 Moody’s 7 2008 Fitch 2012
  • 8. Global Competitiveness BEST-PERFORMING INDICATORS WEF Global Competitiveness Index 2011 2012 Increase 2009 Tax burden 104 58 +46 Government Transparency 112 81 +31 Commercial barriers 54 25 +29 Government spending 101 80 +21 Soundness of banks 95 74 +21 Steps to start a business 65 47 +18 Government regulations 139 122 +17 2012 8 31 42
  • 9. Construction turnaround (by fiscal year) r – revised | p – preliminary Fuente: Junta de Planificación de Puerto Rico, Programa de Planificación Económica y Social, Subprograma de Análisis Económico. 9
  • 10. Politics vs. Economic Pragmatism  Politics vs. proper administration  How to manage electoral risk  Constant communication/ alternative media outlets/ creative positioning  Make difficult decisions early  Is Washington listening?
  • 11. Situation in Washington  Debt ceiling  Funding of government operations  Sequestration  Will Washington fix entitlement programs? (Social Security, Medicaid, Medicare)
  • 12. Agenda for US 1. Control spending/ reduce deficit 2. Simpler/ flatter tax code, lower rates 3. Modernize infrastructure – P3s 4. Strengthen education K-12 5. Enter into and implement Free Trade Agreements 6. Aggressively pursue energy independence 7. Immigration reform 8. Learn to work across the aisle