Free Essay Example: Fiscal Control Board in Puerto Rico

Published: 2023-12-14
Free Essay Example: Fiscal Control Board in Puerto Rico
Essay type:  Analytical essays
Categories:  Policy Immigration Macroeconomics Government
Pages: 7
Wordcount: 1723 words
15 min read

The fiscal control board in Puerto Rico is one of the institutions created under the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (Caribbean Business, 2020). The board members are appointees of the President of the United States, except for one individual from the Puerto Rican government. The fiscal control board is integral to the identity of Puerto Rico since it creates autonomy from the United States federal government. The board is also critical in ensuring that the region's taxing and spending decisions are economically viable to avoid excessive reliance on the federal government, which has significant control over the area. The fiscal control board, in essence, serves to ensure that Puerto Rico can resolve the public debt crisis facing its government.

Trust banner

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Tools used by the Fiscal Control Board

Despite some fears regarding the sovereignty of the region, the institution's structure is such that any assistance it receives from Congress facilitates the control of Puerto Rico by the United States. The fiscal board members have empowerment that allows them to make tough economic and governance choices regarding the region (Manhattan Institute for Policy Research, 2016). Nonetheless, the fiscal board is necessary for ensuring that Puerto Rico sustains itself and any economic activities in the area. One of the tools that the board has adopted in response to this crisis is modifying its pension systems. The systems are now set in a way that allows futures employers and employees to make increased contributions in a manner that responds to the high retirement ages (Manhattan Institute for Policy Research, 2016). There are also labor and income support tools that ensure that the labor participation rates of Puerto Rico are lower than those in the mainland (Austin, 2016). Therefore, adjusting some of the labor regulations is one of the tools that the board, in liaison with some government institutions, has adopted.

Another tool developed to address the economic and budgetary crisis is the adoption of a new contract policy. The new system applies to contracts with a value of more than 10 million dollars (Gamboa, 2017). This measure on contracts is critical since it will allow the board to analyze the new and previous agreements' authenticity. It will also ensure that the contracts issued are in line with the federal government's policies and intentions. Another advantage of the approach is that it will enhance accountability in the region to avoid loss of public funds in federal aid (Gamboa, 2017). The use of this tool will also ensure that board members do not engage in activities that could result in a conflict of interest.

Obstacles Facing the Control Board

The relationship between the fiscal control board and the government of Puerto Rico has not been substantial. The two parties are often in disagreement regarding the steps that need to be taken to ensure that the nation gets financial stability. One of the obstacles that the board faces is accusations about their intrusion on the country's public policy. For example, in June 2020, the government of Puerto Rico filed complaints after the fiscal board challenged laws enacted by Governor Vazquez (Caribbean Business, 2020). This event occurred after the board had challenged the enactment of various directions as the government thought it was an intrusion on public policy. The argument was that the board could only question bills relating to revenues and expenses inconsistent with the original fiscal plan (Caribbean Business, 2020). These eventualities limit the powers of the control board while damaging the relationship between the two bodies. A such, the fiscal control board cannot impose or implement any austerity measures due to the obstacles placed by the government of Puerto Rico in the form of lawsuits.

Non-compliance is another obstacle that the fiscal board is facing from the government of Puerto Rico. Recently, the budgetary board and the government conflicted due to Covid-19 contracts (Caribbean Business, 2020). According to the board, the government was mismanaging procurement procedures during the pandemic. The committee sought to understand the nature in which operations were being undertaken and how contracts were being issued to ensure that the public has confidence in their government and the board. Non-compliance is also visible in the failure by the government to furnish the board with details of necessary expenditures and the same results to mistrust among either of the parties. Therefore, the lack of compliance with the articles and laws of the board is resulting in obstacles in the operations of the fiscal body.

Negative public perception is also another obstacle that is facing the board. Various pseudo names have been given to the board, and one of the terms it as colonial. According to some critics, the fiscal control board is an element of political control that has been imposed on Puerto Rico (Manhattan Institute for Policy Research, 2016). This notion has led to the citizenry and other authorities perceiving the entity as the third wave of colonialism. Critics perceive that the United States' undertakings are in line with their consistent urge to undertake assignments in nations where they are not invited (Portnoy, 2017). According to some quarters, the board's intervention is a show of colonial power that should not have taken place (Portnoy, 2017). Therefore, the propagation of negative perceptions has created a hostile working relationship for the fiscal control board.

Performance Evaluation of the Board

The fiscal control board is meeting its mandate as prescribed by Congress. One of the significant assignments issued to the body is to ensure that there is financial stability in the region. In 2017, for example, the board amended the contract with McKinsey & Co. The board managed to secure an extension of the term required to pay the money in question, and the payment terms were reduced from 1.4 million dollars per month to 875,000 dollars (Valentin, 2017). The scope of operations was expanded through the board, and the body now serves as an advisor to the fiscal control unit. Thus, one of how the board has helped Puerto Rico is by negotiating better payment plans for their outstanding financial obligations.

The body has also managed to furnish the government of Puerto Rico with new government model savings targets. Schools are among the institutions being used to facilitate the success of the plan. In the past, school consolidation has not been encountered by similar changes in expenditure. The program suggests one librarian, nurse, technical support staff, and security guard for each school. Suggestions to cut costs on some of the agencies have created room for savings in this nation (Nevares, 2019). This has also created a chance for reinvestment in the education sector, with the same serving as a platform to prepare the students to join the workforce. Restructuring administrative costs and reinvesting in education is one of the long-term solutions the board, together with the government of Puerto Rico, are overseeing.

Adoption of a Board in the U.S Virgin Islands.

A similar fiscal control board is necessary for the United States Virgin Islands. The territorial government in the region faces economic challenges since most of the activities taking place in the area are reliant on the administration. The sugar cane and tourism sectors, which were a means of sustenance, are no longer efficient, and the region has enormous budget deficits (Austin, 2018). The territorial government made an error by covering the budget deficits with borrowed funds, and the same raised issues regarding unpaid pensions and the high levels of public debt. Like Puerto Rico, most of the Virgin Islands citizens rely on the government for the provision of incomes and essential services, and the administration is struggling to provide the same (Austin, 2018). Tax increases are also inconsistent and insufficient measures in such a crisis, and the Government Accountability Office is expressing doubt in the attempts to restore the capital markets. Thus, a control board would be necessary for the Virgin Islands since it would help revitalize the economy.


In conclusion, the fiscal control board has helped in reviving the economy of Puerto Rico. Despite the slow progress, there have been immense changes that allow the region to clear its public debt. The government of Puerto Rico is also shifting its focus to sections such as education, which are likely to sustain the nation in the long-term. However, there have been challenges, such as power struggles between Puerto Rico and the fiscal control board. This obstacle has resulted in legal suits that derail economic progress. There is also non-compliance from the government of Puerto Rico, and the same exposes the economy to more plundering. The media and other critics of the board are also making it difficult for the region to succeed due to the propagation of the colonialism narrative. Instilling fear in public leads to low levels of cooperation, and it creates rigidity in some sectors. Regions such as the United States Virgin Islands could benefit from a fiscal board due to the economic crisis that the region is experiencing. Most of the people living in the area rely on the government for the provision of most services. Currently, the administration cannot commit any funds towards a pension or the promotion of any economic activity. The sugarcane and tourism industries can no longer be relied on, and this had led to the failure of this economy. Hence, fiscal boards can become essential during a crisis since they assist nations in managing public debt and resuscitating vital sections of the economy.


Austin, D. A. (2016). Puerto Rico's Current Fiscal Challenges. Congressional Research Service.

Austin, D. A. (2018). Economic and Fiscal Conditions in the US Virgin Islands. Congressional Research Service.

Caribbean Business. (2020, June 12). Puerto Rico Gov’t sues fiscal board for challenging 6 laws.

Gamboa, S. (2017, October 31). Puerto Rico must get the financial oversight board's okay for contracts of $10 million and up. NBC News.

Manhattan Institute for Policy Research. (2016, April 12). A fiscal control board for Puerto Rico. Economics21.

Nevares, R. R. (2019). Revised Fiscal Plan For Puerto Rico. As Submitted To The Financial Oversight and Management Board for Puerto Rico.

Portnoy, A. (2017, August 15). The tragedy of the missing C: The (Colonial) fiscal control board in Puerto Rico.

Valentin Ortiz, L. (2017, March 24). Fiscal control board amends contract with McKinsey & Co. Caribbean Business.

Cite this page

Free Essay Example: Fiscal Control Board in Puerto Rico. (2023, Dec 14). Retrieved from

Request Removal

If you are the original author of this essay and no longer wish to have it published on the SpeedyPaper website, please click below to request its removal:

Liked this essay sample but need an original one?

Hire a professional with VAST experience!

24/7 online support

NO plagiarism