Basic problems with accounting practices still holding back recovery in Puerto Rico

Source:Global Times Published: 2018/9/2 19:33:39

Puerto Rico's revival relies on re-establishing the certainty of death and taxes. The island's governor, Ricardo Rosselló, on Tuesday put the official death toll from last year's Hurricane Maria at 2,975, citing the calculations of an independent study he had commissioned. That's a 46-fold increase on the initial count of just 64 fatalities. The delay is emblematic of wider problems that are hobbling Puerto Rico's recovery.

The analysis conducted by George Washington University isn't the first to diverge from the official count. A previous study attributed nearly 5,000 deaths to the storm in the three months after it devastated the US territory.

The discrepancies are unsettling. They're also just the latest in a long line of data inaccuracies that have plagued Puerto Rico. The federally appointed oversight board, for example, has faced challenges simply getting the island's population count right. Government entities like power company PREPA have struggled with who should and shouldn't be on the payroll.

These would be troubling enough if they were just a consequence of Maria. But the problems stretch back years. The government's audited financial statements for 2015 were only released last month, for example. And the oversight board-commissioned report into the fiscal crisis that drove Puerto Rico into bankruptcy in spring last year has some eye-opening details. Revenue estimates for most of the years between 2005 and 2014 were over the top by $300 million to $1.7 billion - more than a fifth too generous, in the latter case. That, as the report points out, allowed the fiscal crisis to worsen.

The chronic lack of accurate information makes it difficult to draw up a credible budget, let alone a plan to repay its debts, which stood at $74 billion when it went bust.

Improving the situation may require help from Washington. The oversight board has repeatedly asked the federal government to collect and publish data for Puerto Rico in the same way it does for states. In its latest annual report, the board also requested funds for a special census for the island, but nothing has emerged.

Rosselló has promised to improve  the reporting of fatalities related to natural disasters. That is a step forward. But if he can't find a way to sort out Puerto Rico's accounting practices, it'll be hard for the island to prosper.

The author is Amanda Gomez, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews.

Posted in: INSIDER'S EYE

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