(Adds analyst views and market activity, paragraphs 4 and 7)
By Edward Krudy
NEW YORK, June 10 Puerto Rico may reschedule
payments to the Government Development Bank as well as the
pension system for central government employees as it aims to
reduce a $320 million tax revenue shortfall by the end of the
fiscal year on June 30, the U.S. Commonwealth said on Tuesday.
The government said it is considering restructuring about
$250 million in payments to the GDB and $90 million to the
Central Government Employees Retirement Systems Administration.
It may also use a $35 million surplus from a 2009 sale of sales
tax bonds to plug the gap, it said.
News the government seems unable to close this year's
shortfall through operational budget cuts or revenue raising
measures is likely to heighten scrutiny on the U.S. Commonwealth
as it struggles with high debt levels and a sputtering economy.
The move was a worry given Puerto Rico's history of kicking
its fiscal troubles further into the future, analysts said. In
April, the Commonwealth suffered a $380 million corporate tax
revenue shortfall when more than half of corporations applied
for a three month extension until July 15.
The Commonwealth said it was considering bringing the
deadline forward to help meet the current gap.
Puerto Rico's general obligation debt traded at its lowest
level this month. Debt that carries an 8 percent coupon and a
maturity date on 2035 traded at an average
price of $89.188, according to data from Municipal Market Data,
the lowest average price it has traded at since May 29.
Trading in the debt, however, was relatively light with over
$10 million of the bonds traded by midday.
Carlos Rivas, director of the Office of Management and
Budget, said the move did not signal a return to lax budget
practices. He said the Commonwealth would submit a bill in the
next 90 days to establish a repayment plan for the amounts to
the GDB and the Retirement Systems Administration.
"Although this additional reduction in expenses of $340
million will be based on non-operational cuts, we will continue
exerting the same fiscal responsibility," said Rivas.
The measures were announced even as Puerto Rico said May tax
collections had rise to $753 million, outstripping the previous
year's collections by $141 million, or 23 percent, according to
preliminary data from the Treasury department. Collections also
beat the government's own estimates by $29 million.
Puerto Rico announced a series of measures to boost revenues
in its last budget. They included a new gross receipt tax for
corporations, an increased excise tax for foreign companies, and
a crackdown on tax evasion.
Those measures have been paying off. So far this year, tax
collections have rise to $8.02 billion. That amounts to $614
million, or 8.3 percent, more than the same period last year,
the Treasury department said.
(Reporting by Edward Krudy; Editing by Grant McCool)