May 2006 Financial News

Puerto Rico in the Middle of Partial Government Shutdown

May 03, 2006

Puerto Rico is in the middle of a partial government shutdown which has closed public schools and thrown about 100,000 people out of work. All public schools were closed two weeks before the end of the academic year together with 43 government agencies. The shut down has resulted from a budget shortfall which has left the island with insufficient funds to rally through to the end of the fiscal year 2006. An immediate effect has been demonstrated as fewer cars were seen on the country's roadways. The labor force of Puerto Rico according to the 2003 statistics is 1.2 million, thus with 10% of the working population suddenly out of work and without a paycheck, the effect would be felt in all segments of the economy. The government is at an impasse with regards to solving this situation and as such it is unclear what the time horizon of this crisis would be. It is notable that one of our local companies Prestige Holdings Limited, operates in Puerto Rico, and as such, may well be affected if this crisis is prolonged.

Jason Gokool
Sreshtha Tewari
WISE Research Team