Puerto Rico is revising a fiscal and economic reform plan to reflect a jump in the island’s projected deficit and steep drop in anticipated revenues, officials said Monday.
The government said the deficit is now projected to grow from $14 billion to $16 billion over the next five years due to the U.S. territory’s worsening economic crisis. Officials also told reporters during a conference call that they expect revenue to fall by $1.7 billion over the same period.
The government also extended projections within the five-year plan by another five years at the request of creditors, noting that the deficit could grow to $24 billion by 2025.
The announcement comes as Puerto Rico seeks access to a bankruptcy mechanism as it struggles with $72 billion in public debt that the governor has said is unpayable and needs restructuring. The U.S. territory already has defaulted on several payments and faces its first lawsuit over the government diverting funds to meet certain payments.
The government also has implemented other measures to help maintain liquidity, including deferring payments to suppliers and withholding some $330 million in tax refunds.
“Continuation of these measures is neither sustainable nor in the interest of any stakeholder, as they will only deepen the financial gaps,” said Secretary of State Victor Suarez.
The original fiscal reform plan was released in September and addresses only a portion of the island’s debt. The plan calls for several measures, such as merging state agencies, cutting subsidies to municipalities and extending legislation to freeze new hires and salary increases.
Portions of the plan require legislative approval, but government officials expect to negotiate with creditors soon as they warned that time was running out.
“The information contained in the updated plan makes all the more clear that actions must be taken before the Commonwealth runs out of options to pay its debt and provide essential services to the people of Puerto Rico,” said Melba Acosta, president of the Government Development Bank.
U.S. Treasury Secretary Jacob Lew is expected to visit Puerto Rico on Wednesday and meet with government officials and business leaders to talk about the island’s financial situation. He demanded last week that U.S. Congress approve legislation by March to deal with Puerto Rico’s crisis before it’s too late.