March 18 (Reuters) - Moody’s Investors Service said on Monday that Puerto Rico’s budget gap has doubled since December, when the Wall Street credit agency cut its credit rating for the Caribbean island to near-junk bond status.
“Since then, the commonwealth’s underperforming general fund revenues, in conjunction with higher than estimated expenses, has opened a mid-year budgetary gap and increased the estimated fiscal 2013 structural imbalance from $1.1 billion to almost $2.2 billion, or 22 percent of the revised budget,” Moody’s said in a written commentary.
Despite moves by the U.S. commonwealth’s new government to step up tax revenues, Moody’s said, “The increased structural imbalance makes it clear that Puerto Rico’s fiscal difficulties are not over.”
In December, Moody’s downgraded Puerto Rico’s general obligation rating to Baa3 with a negative outlook, with its analysts pointing to a weak retirement system and few prospects for significant improvements in government finances and the island’s economy.
Another credit agency, Standard & Poor‘s, on Wednesday reduced its rating for Puerto Rico, a big issuer of municipal bonds, to near-junk status.