Wednesday, August 20, 2025
Puerto Rico and the Caribbean
PUERTO RICO’S 13.1B BUDGET
Despite 64% going to education, public safety, health, and pensions, several agencies face cuts
Elián Flores García >Wjournal
The departments of Agriculture, Corrections and Rehabilitation, Public Safety, and the University of Puerto Rico are among the agencies that will receive less funding in the new budget presented by Governor Jenniffer González and approved by the Fiscal Oversight and Management Board (FOMB).
For fiscal year 2025-2026, the amount approved totals $13,095,315,000, as allocated by the State Treasury’s Gen-
eral Fund for government expenses for the fiscal year ending on June 30, 2026.
González presented her FY 2026 budget of $13.1 billion, representing a 1.5% increase compared to the previous year. Of that total, $8.6 billion—or 64%—will be directed to education, public safety, health, and pensions, according to a press release from the governor, who developed the budget alongside the Office of Management and Budget and the FOMB before submitting it to the Legislative Assembly.
Agriculture Secretary Josué Rivera noted that the budget allocated for FY 2025 does not show a significant change compared to the previous year, which could strain
An Ode to Progress & Hope
The special publication you are reading is history in the making, an affirmation in response to a business community in Puerto Rico starving for a new narrative—of progress and hope. The return to print of the News Journal has an emphasis on the W in the word “news,” as in the five foundational Ws of journalism—Who?; What?; Why?; When? and Where?
but rather as a beginning of dialogue that leads to solutions.
Back to the drawing board
During an omnibus hearing on December 11, U.S. District Judge Laura Taylor Swain again called on all parties in stalled talks over a proposed debt settlement plan for the Puerto Rico Electric Power Authority (Prepa) to continue in the mediation process, despite pessimistic statements made by the mediation team in its latest report to the bankruptcy judge.
some of the agency’s internal allocations.
The pressing concerns over the many loose ends—such as creditor constituents chomping at the bit in Puerto Rico’s energy transformation are discussed with precision. And if you want to understand challenges coming for the incoming administration of Governor-elect Jennifer González, who takes office with an agenda for progress together with Resident Commissioner-elect Pablo José Hernández Rivera, hell-bent on economic development, you will read about the devil in those details in this edition.
Judge Swain said that “I have to maintain hope, for the people of Puerto Rico, that a fair and efficient conclusion to this process will be achieved,” urging Puerto Rico’s Financial Oversight and Management Board (FOMB), the Puerto Rico government and utility creditors and bondholders in deadlocked negotiations to use their “imagination” to see beyond the position that they are the only ones with a reasonable position.
The report says that “the arrival of the new administration in Puerto Rico as well as the advancement of proceedings in the pending case before the Puerto Rico Energy Bureau relating to PREPA and LUMA’s liquidity and cash flows present additional challenges – and perhaps additional opportunities for progress.
According to figures provided by his finance team for the public hearings, the budget went from $38.2 million in FY 2024 to $40.1 million in 2025.
“The increase is mainly due to the inclusion of CAPEX funds, a higher allocation for electricity, and a slight adjustment in other expenses and federal matching funds. We’re looking at an increase of barely 1.3% or 2%, so it’s not significant,” Rivera said.
Our solemn promise is to ask wise questions for essential answers.”
The secretary emphasized that the agency has seen a reduction in its workforce due to Law 80, and the budget does not include major changes to farmer incentive programs. “The most important thing is that incentive funds are not being touched. We will still be able to offer incentives to farmers, including the wage subsidy,” he stated.
We want to know Who is giving Puerto Rico reason to hope for jobs that drive our economic development, not with empty slogans, but with investments and action—putting money behind endeavors employing the many talented professionals across industries in Puerto Rico. We want to inform readers What makes our “empresarios” so special—is it their belief that new residential development would fit the needs of young families building a future? Repeatedly, we will report on “Why is it worth investing in Puerto Rico?”—because of our talented professionals, federal regulatory compliance, and attractive tax incentives. Admittedly, there is work to be done—on the permits front and so many other works in progress. Our solemn promise is to ask wise questions for essential answers.
Rivera explained that the Department of Agriculture is undergoing a reorganization process aimed at improving efficiency, digitizing, and eliminating redundancies. “We want the government to focus on facilitating farmers, promoting incentives, and providing technical assistance, while the private sector takes on functions that are not essential to the agency,” he said.
One of our many sources on Capitol Hill with ties to the incoming Trump administration put it best with this: “The year 2025 will certainly be an exciting year to look into—you have new leadership in Puerto Rico, somebody who has said, “I am going to focus on young people, our grandparents, and trying to create as many jobs as possible—I don’t want to put words in [the Governor-elect’s] mouth, but that is my interpretation of what she has said. And, I think the Oversight board has an interest in that because it also has an interest in economic growth in Puerto Rico.”
FOMB Executive Director Robert F. Mujica, Jr. said during a press conference on Dec. 11 that despite the mediation team’s pessimistic report the oversight board was “hopeful that we can complete the process in 2025,” and that “we will go back into mediation and do what the court asks us to. At the end of the day, as the chairman mentioned, we need a plan that’s feasible and we need a plan that makes sure that Prepa can continue to fund the operations, repair a system that had lack of investment for decades…”
platform for applying for them. He also said, “We’re reviewing regulations and systems so that processes are more agile and truly benefit agricultural production, not to subsidize operations that are not sustainable.”
Our strategic priorities remain firm... The operational environment changes rapidly, and our duty is to adapt so that the public safety ecosystem remains effective.
Arturo Garffer, Public Safety Secretary
When presenting the budget, the governor stated that it includes certain reclassifications of General Fund revenue as special revenue. However, FOMB Executive Director Robert F. Mujica Jr. said the budget “reflects the knowledge we have today, as well as Puerto Rico’s current fiscal reality.”
Mujica acknowledged, however, the overall impact “that recent and future changes in federal government policies and funding levels will have on Puerto Rico’s finances and economy.” If federal funds are reduced and cannot be replaced, the funds initially allocated for expansion could be redirected to cover essential services previously funded with federal dollars.
Looking ahead, the secretary acknowledged the need to maintain fiscal discipline and make the most of available federal funds.
“We’re reviewing contracts and staff to identify savings. Perhaps next year’s budget request will be slightly higher, but not by much. We want to exit the Fiscal Oversight Board’s su-
Readers who want to know when meaningful measures are coming down the legislative pike will want to read the News Journal; so, will investors who want to know where to put their money behind the next big thing. In this return to a print edition—a momentous occasion in itself—you will read about an exodus of talented physicians who are leaving the island because of the Health Department’s tardiness in paying residents and paltry compensation. The story is not meant as a fire and brimstone indictment,
At this writing, it seems the Financial Oversight and Management Board is focused on finalizing Puerto Rico’s debt restructuring with PREPA and securing discipline in achieving structurally balanced budgets. However, without much-needed job creation, we will not achieve the economic development that was stripped from this island’s progress. We believe in the foot soldiers of economic development set to thrive in this new era. The possibilities are endless; this W Journal aims to make them a reality.
pervision and balance the budget,” Rivera noted. He also highlighted existing tax relief measures for the agricultural sector. “The governor extended the bona fide farmer tax exemption for four more years. This includes exemptions of up to 90% on income, property, and sales and use tax. It’s relief that provides more business certainty,” he said. Rivera announced that soon there will be increases in certain incentive categories, along with upgrades to the online
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The General Fund budget does not include special revenue funds, which consist of income generated by the government from fees and services earmarked for specific uses or from federal funds.
Health Sees Slight Increase
Puerto Rico’s electricity is overburdened by regulation. It will take serious work on the legislative front to start our way back to energy transformation.”
Health Secretary Víctor Ramos reported that the FY 2025 budget includes a moderate increase, mainly aimed at specific initiatives such as adjusting salaries for nurses, strengthening medical residency programs, and purchasing specialized medications.
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— An expert source with knowledge on energy affairs
Among the most notable allocations, Ramos highlighted
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Judge Laura Taylor Swain
approximately $12 million to match the salaries of nurses at the Pediatric Hospital and the University Adult Hospital with those of nurses in the Health Insurance Administration (ASES). “It was a commitment from the governor to retain personnel, as many nurses were moving from one hospital to another in search of better pay,” he said.
Funding was also allocated to reactivate and expand medical residency programs, including neurosurgery. Ramos explained that the Department currently administers 23 residencies and that the Medical Sciences Campus had stopped requesting some slots due to budget constraints. “We worked with the Board so that those funds would go through the Department of Health, preventing cuts to the university’s budget,” he stated.
Another significant allocation will fund the purchase of medications to treat hepatitis C in the prison population. Ramos clarified that by purchasing directly through the Department, costs are significantly lower than if they were acquired by the private contractor managing prison healthcare services.
The budget also includes resources to build emergency medical bases in San Lorenzo and Ceiba — the latter being the only municipality without such facilities — as well as resources for the University Hospital in Bayamón.
Although Ramos acknowledged that new needs always arise, he said the relationship with the FOMB has allowed requests to be approved when properly justified. However, he noted that some requests, such as $1 million for the Institute of Statistics, were left pending for the next fiscal cycle.
Regarding the agencies under the Health Department umbrella, Ramos noted that ASES faces the recurring challenge of operating with a deficit, partly because it handles high-cost cases not covered by health insurance or the State Insurance Fund. “By definition, ASES always runs a deficit, as happens in other jurisdictions with tertiary-level hospitals,” he pointed out.
As for the State Insurance Fund, Ramos said it is the most financially stable entity within the system and that a bill has been proposed to double benefits for injured workers and reduce premiums for most policies.
DSP to Maintain Priorities Despite Budget Cut
Public Safety Department (DSP, in Spanish) Secretary Arturo Garffer said in a written statement that the 3% budget reduction for the upcoming fiscal year will not compromise the agency’s ability to prevent, mitigate, and respond to emergencies.
“Our strategic priorities remain firm. We will continue investing in modern technology to prevent risks, using federal funds efficiently, ensuring continuous training and updated equipment for our personnel, renovating facilities for greater
Puerto Rico FY 2026 Budget Overview
billion
($8.6 billion)
Allocated to education, public safety, health, and pensions
adaptability, and, above all, providing comprehensive support to our human capital,” Garffer said.
Regarding possible operational changes, Garffer explained that the agency already routinely redistributes resources and adjusts its plans as needed. “The operational environment changes rapidly, and our duty is to adapt so that the public safety ecosystem remains effective,” he stated.
Detailed Budget Changes
In the FY 2025 budget, the Department of Education will see the largest increase in allocations, with an additional $210 million compared to the previous fiscal year. The allocation rose from $2.87 billion in 2024 to $3.08 billion in 2025, representing the most significant budget boost among government agencies and entities.
The second-largest increase will go to the Department of Treasury, which will receive $41 million more, raising its budget from $213.9 million to $254.9 million. The Medical Services Administration (ASEM) will have an increase of $40.8 million, from $63.3 million in 2024 to $104.1 million in 2025, making it one of the agencies with the greatest positive variation in its budget.
The Department of Health will also see an increase, al-
Largest Increases (by Agency)
+ $210 million – Department of Education (from $2.87B > $3.08B)
+ $41 million – Treasury (from $213.9M > $254.9M)
+ $40.8 million – Medical Services Administration (ASEM) (from $63.3M > $104.1M)
+ $30 million – Health Department (from $1.53B > $1.56B)
though smaller compared to the agencies mentioned above, with an additional $30 million, bringing its budget from $1.53 billion to $1.56 billion. The Department of Transportation and Public Works, along with the Integrated Transit Authority, will see a $19.5 million increase, from $111.1 million to $130.6 million.
As for reductions, allocations under the Office of Management and Budget (OMB) will see the largest cut, with a decrease of $223 million, from $1.07 billion in 2024 to $846.6 million in 2025.
The Department of Public Safety will have the second-largest reduction, with $50 million less than in the previous budget, going from $1.3 billion to $1.25 billion. The University of Puerto Rico will face a $33.9 million cut, reducing its allocation from $534.8 million to $500.9 million for the next fiscal year.
The Department of Corrections and Rehabilitation will see a $4.4 million decrease, from $472.6 million to $468.2 million. Finally, the Department of Agriculture and the Administration for the Development of Agricultural Enterprises (ADEA) will have a $3.5 million reduction, from $115.2 million to $111.7 million.
The new fiscal year began on July 1, 2025.
+ $19.5 million – Transportation & Public Works + Transit Authority (from $111.1M > $130.6M) Largest Reductions (by Agency)
– $223 million – Office of Management and Budget (from $1.07B > $846.6M) – $50 million – Public Safety (from $1.3B > $1.25B)
– $33.9 million – University of Puerto Rico (from $534.8M > $500.9M)
– $4.4 million – Corrections and Rehabilitation (from $472.6M > $468.2M)
– $3.5 million – Agriculture & ADEA (from $115.2M > $111.7M)
Highlights Agriculture – Budget from $38.2M (2024) to $40.1M (2025);
– $12M allocated for nurse salary adjustments at Pediatric & University Hospitals
Programs – Reactivation & expansion, including neurosurgery
– Funds allocated to purchase
Trump’s Cartel Order Revives ‘Bitter’ Memories in Latin America
Just a decade ago, the era of U.S. wars, coup plots and military interventions in Latin America seemed to be ebbing when the Obama administration declared that the Monroe Doctrine, which long asserted U.S. military supremacy in the Americas, was dead.
Now this cornerstone of foreign policy is roaring back to life, resurrecting fears over U.S. military interference in the region after President Donald Trump ordered the Pentagon to use military force against certain Latin American drug cartels.
Leaders in the region are still trying to decipher what Trump’s order could mean. Mexico and Venezuela, two nations where the administration has designated cartels within their borders as terrorist groups, seem especially vulnerable.
But up and down much of Latin America, any whisper of reviving such actions could also unleash a chain reaction resulting in a surge in antiAmerican sentiment. The news of Trump’s order has already intensified a wariness against intervention from abroad, even in Ecuador and other countries plagued by violent drug wars in recent years.
“I’m a right-wing conservative, so I want armed citizens and the military actually shooting,” said Patricio Endara, 46, a businessperson in Quito, the Ecuadorian capital. “But I wouldn’t agree with having foreign soldiers in Ecuador.”
That skepticism draws from the bitter memories left by the long record of U.S. military interventions in the region, whether through direct or indirect action, as during Colombia’s long internal war.
“Those are formulas that have shown, to the point of exhaustion, their failure,” Iván Cepeda, a Colombian senator, said in an interview.
These kinds of interventions “inflict
immense damage,” said Fernando González Davidson, a Guatemalan scholar, pointing to how such actions often strove for regime change. “The U.S. leaves power in the hands of a corrupt and criminal class aligned with its own interests.”
A U.S.-backed coup in 1954 in Guatemala ousted a democratically elected leader over concerns that a land reform project threatened United Fruit Co., a powerful American corporation with large tracts of land there.
In the decades that followed, that Guatemalan coup became a rallying cry across the region by exposing U.S. Cold War policy as a tool for protecting U.S. interests over democratic principles and national sovereignty.
Long before the U.S. military’s involvement in the region became so contentious, President James Monroe’s assertion in 1823 that the United States could use its military in Latin America had more bark than bite, historians say.
The United States at the time lacked the power to do much intervening.
Concerns over European meddling in the hemisphere, one of the doctrine’s early features, soon eased when it became clear that European powers, dealing with their own internal challenges, could not easily recolonize newly independent Latin American nations.
But in the 1840s, President James K. Polk invoked the doctrine to justify the Mexican-American War, which produced the U.S. conquest of Mexican lands now comprising states such as California, Arizona, Colorado and New Mexico.
That humiliating outcome, and other U.S. military interventions in Mexico in the 1910s, profoundly shaped Mexico’s political identity, fostering a strong sense of nationalism that is often in opposition to the United States.
Mexican President Claudia Sheinbaum tapped into such sentiment Friday when she rejected the use of
U.S. military forces in her country. She made it explicitly clear that Mexico has ruled out any kind of “invasion.”
U.S. military action inside Mexico would be disastrous for bilateral cooperation on issues like migration and security, said Arturo Santa-Cruz, an expert on U.S.-Mexico relations at the University of Guadalajara.
Territorial expansion came into play again during the Spanish-American War in 1898, solidifying the United States’ emergence as a global power when it took Puerto Rico, Guam and the Philippines from Spain.
President Theodore Roosevelt followed in 1903 by sending warships to support a revolt by separatists in Colombia. They formed Panama and gave the United States control over the Canal Zone, which Panama fully regained only in 1999.
Roosevelt created his own corollary to the Monroe Doctrine the next year, claiming that the United States should exert “police power” in the Americas when it found cases of flagrant
“wrongdoing.”
This pivot turbocharged U.S. interventions, and protecting American property often was the justification. In Cuba alone, U.S. forces intervened on three occasions from 1906 to 1922.
Elsewhere in the Caribbean, U.S. forces occupied Haiti from 1915 to 1934, establishing a pro-American government. U.S. soldiers similarly occupied the Dominican Republic from 1916 to 1924, partly to manage the national debt owed to American creditors.
In Central America, Honduras saw repeated U.S. military landings in the 1910s and 1920s, and U.S. forces occupied Nicaragua from 1912 to 1933, partly to prevent any other nation from building a Nicaraguan Canal.
During the Cold War, the United States found new ways to intervene. This included supporting coups that ousted democratically elected leaders in Guatemala, Brazil and Chile.
Simon Romero and Annie Correal >The New York Times Company
International Tourism fair: a Success for Local Communities
Enrique Muchacho >WJournalpr
The International Tourism Fair (FITUR, its Spanish acronym) held in Madrid in January was an opportunity to showcase what Puerto Rico has to offer.
The four-day event opened many doors of possibility, with many centered on creating easily accessible ways to get to Puerto Rico and attract new tourists.
“FITUR is one of the most important tourism events in the world, held every January in Madrid. Annually, the Fair becomes a key platform for connecting and strengthening tourism marketing with Europe, Latin America, and other prominent markets in the global tourism arena,” said Willianette Robles Cancel, executive director of the Puerto Rico Tourism Company (PRTC).
Robles Cancel said that their presence at FITUR has positioned the island in a “privileged position to forge significant agreements that directly impact Puerto Rico’s economy.”
“A clear example of this is the renewal of the agreement with Iberia, which ensures daily flights between Madrid and San Juan throughout 2025, with an estimated economic impact of $29 million and a projected 40% increase in European passenger traffic to the island,” she said.
Robles Cancel also indicated that agreements have been made with Aeroméxico to establish a direct flight route between Mexico City and San Juan, and with the Dominican Republic’s
Ministry of Tourism to promote multi-destination tourism. She also highlighted the active role played by businesspeople from Puerto Rico as part of the delegation.
“Their participation in FITUR gives them the opportunity to generate direct connections with international buyers, tour operators, travel agencies, and other key players in the tourism ecosystem. They capitalize on these contacts to expand their businesses, diversify their offerings, and access new markets, which in turn strengthens the local economic base and expands the tourism value chain,” the executive explained.
FITUR (International Tourism Fair) is one of the most important tourism events in the world, held every January in Madrid.
Willianette
Robles Cancel, Executive Director of the Puerto Rico Tourism Company
One of the main goals at FITUR is the connections that tourism-related industries create to accomplish commercial agreements resulting in economic benefits. Discover Puerto Rico, which was invited by the PRTC to help promote Puerto Rico, worked on such agreements.
“In this particular fair, we established business relationships with wholesalers, travel organizations, and online
Puerto Rico showcases local tourism at Madrid fair
travel agencies. We invested $300,000, which resulted in nearly $10 million in travel to Puerto Rico and boosted the local economy. Additionally, we promoted Puerto Rico in Spanish and European media outlets while at FITUR, which generated an advertising value of $763,741; the total cost of Discover Puerto Rico’s participation in the event was around $94,000,” said Ricardo Cortés, vice President of engagement and industry affairs at Discover Puerto Rico.
At FITUR, while the PRTC was responsible for promoting the qualities that make Puerto Rico a unique destination, Discover Puerto Rico’s mission was to help companies highlight their offerings to potential travelers from Spain, Europe, and other markets.
Local Campaigns
While the PRTC led the promotion efforts, some Puerto Rican municipalities participated with their own tourism-cen-
WEDNESDAY, AUGUST 20, 2025
tered campaigns. For example, Aguadilla set the tone with its campaign, “Ven a Aguadilla y tráete tu silla” (Come to Aguadilla and Bring Your Chair).
“Ven a Aguadilla y tráete tu silla” allowed us to showcase our beaches and our beautiful places, so people want to come here. We used one of our beloved baseball players, Carlos Delgado, to spread the message that when you come to Aguadilla, you’re going to have a great time,” said Julio Roldán Concepción, mayor of the western town of Aguadilla.
Roldán Concepción also said that the campaign was an idea born out of the interest in bringing more European tourists to Puerto Rico’s west coast.
“We went to FITUR to spread the message that Aguadilla is one of the best places to vacation. This was an investment we made. We’ve seen investment back home, in our beaches, in our boardwalk. We’ve seen a lot of Spanish tourists, even if you’ve asked them how they heard about us, and they tell us it was through FITUR at a tourism fair, and that’s a great opportunity we had to bring tourism to Spain,” he explained.
The city of San Juan also presented its campaign, “Déjate Llevar” (Let Yourself Go), focusing on urban experiences and culture.
“FITUR is not just a tourism showcase; it is a global platform where deals are made, historical ties are strengthened, and our international reach is expanded. The 2024 and 2025 results
demonstrate that San Juan not only competes at the highest level but is also consolidating its position as a leading destination,” said Miguel Romero Lugo, mayor of San Juan.
“Déjate Llevar” is the second campaign showcased by the city of San Juan at FITUR, with the previous one reaching 8.4 million people.
“As mayor of the capital city, I participated in FITUR because I firmly believe in the value of presenting San Juan on the international stage. We aren’t satisfied with being known just as an island in the Caribbean; we want our city to be on the list of must-see destina-
tions in the world. Each edition (of FITUR) opens doors for us, allowing us to attract visitors, investments, and strategic alliances that translate into economic development and opportunities for our people. FITUR is a direct investment in the tourism, cultural, and economic future of San Juan.”
According to Roldán Concepción, these campaigns have been successful in increasing the influx of tourists to the Island.
“We see it on our beaches and our tourist spots, which are packed with non-Americans. Many of them are European nationals,” he said.
Spain as a Major Tourism Market
According to Ricardo Cortés, Spain is a major market for Puerto Rico in terms of tourism, and FITUR is one of many events aimed at engaging those audiences.
“If you only go to FITUR, you don’t get to make a mark in the market; you need to have a constant presence of the destination in these markets so that it remains fresh in the minds of travelers. But FITUR is an important event to create relationships between businesses, and the Puerto Rican Tourism Company and its strategies also find great value in it,” Cortés explained.
Cortés also mentioned that other promotional efforts include working with magazines such as Condé Nast and National Geographic, as well as outreach in international markets.
“It’s not just FITUR. We have a presence all year long,” he said.
Furthermore, Robles Cancel said that Puerto Rico participates in strategic discussions with entities such as the World Travel and Tourism Council (WTTC) and UN Tourism, which help strengthen the island’s public policies on sustainability, resilience, and tourism innovation.
“FITUR is a powerful platform to project our vision of the future: a vibrant island, connected to the world, committed to tourism as an engine of economic and social development,” she said.
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The economy braces for changes in consumer spending patterns
Clothing, footwear and apparel will experience some of the higher price spikes
Stephanie L. López
>wjournalpr
The most recent round of tariffs imposed by President Donald Trump will turn out to be the highest since the Great Depression, a reality that, according to economists, will drive prices up in the United States, including Puerto Rico, and most likely change consumer spending patterns.
The new tariffs, which began on August 7, include rates ranging from 25% to 50%. The U.S. imposed 50% tariffs on Brazil and India due to policy and oil purchase disputes, with India currently at 25% until full rates apply. Mexico and Canada face tariffs of 35%, respectively, though Mexico’s tariff increase is paused due to last-minute negotiations.
According to the Yale Budget Lab, con-
sumers face an overall average effective tariff rate of 18.3%, the highest since 1934, and after consumption shifts, the average tariff rate is projected to be 17.3%, the highest since 1935.
The full slate of 2025 tariffs is projected to push consumer prices up by 1.8% in the short run, which translates into an average household income loss of about $2,400, according to the Yale Budget Club.
However, these estimates assume that the Federal Reserve will take no action, which means the impact would be felt mainly through higher prices rather than reduced nominal wages.
Households in the lowest income bracket are expected to face annual losses of about $1,300 before adjusting spending patterns. After those adjustments, the price increase is projected to ease to 1.5%, or roughly a $2,000 loss per household.
What Will Be Affected?
The analysis suggests that 2025 tariffs are expected to hit clothing and textile prices hardest, with shoe prices rising almost 40% and apparel costs up 38% in the short run. In the long run, prices are forecast to remain elevated —19% higher for shoes and 17% higher for apparel.
According to José “Pepe” González, president of the Puerto Rico Retailers Association (ACDET, in Spanish), since March business owners have been feeling the impact of price changes, and the constant uncertainty has changed the way they do business.
“Since April the impact has been noticeable, though to a lesser degree. More recently, however, the magnitude of the tariffs — both in terms of their size and the number of countries involved in these latest decisions — has made them virtually unavoidable. No matter which country you buy from, some type of tariff will apply,” said González.
As a matter of fact, González, who also owns a business, said that his retail store was in negotiations to import products from India — a deal that fell through immediately when Trump announced tariffs as high as
50% on products from that country.
The businessman insists that most companies have limited their negotiations, buying strictly what is necessary and keeping prices as low as their margins allow it, to remain competitive.
Inflation and Cost of Living: A Cumulative Impact
According to Chantal Benet, chief operations officer at Intelligent Economics, what González described will most likely happen to other businesses on the Island as well, since after the COVID pandemic, U.S. imports from China were reduced, and companies began sourcing supplies from countries like Vietnam and India.
“This entire post-pandemic period has only driven prices higher. Now, imagine tariffs are also being imposed. In technical terms, inflation has remained stable in both the United States and Puerto Rico. However, in aggregate terms, Puerto Rico’s cost of living so far in 2025 is 15% to 16% higher than it was in 2020. In some sectors, such as food, prices are 26% higher,” warned Benet.
“Implementing a tariff may not raise prices overnight for most products — although for some it might — but the reality is that 70% of Puerto Rico’s imports come from the U.S. With consumer demand already falling, it becomes much harder for people to afford goods, especially as disposable income continues to shrink. The impact is even greater for those with fixed incomes, such as retirees, who feel the squeeze more acutely,” the economist warned.
Consumer Confidence and Changing Shopping Habits
While Puerto Rico’s Consumer Confidence Index, published by Intelligent Economics, spiked in both July (44.6%) and June (39.55%) up from May (36.5%), economist Chantal Benet pointed out that it is still below historical levels.
In July, rising utility costs emerged as the top concern among consumers in Puerto Rico. Other key issues cited by those polled included income stability, the impact of inflation, job security, and crime.
Throughout the first six months of 2025, the economy, income security, and higher utility costs (water and electricity) ranked as the leading concerns, followed by inflation.
The economist indicated that these concerns would affect not only discretionary spending but also essential spending such as grocery shopping, with people modifying the
Tariffs Overview
10%–50%
Range of new tariffs imposed since August 7, 2025
50% – Tariff on Brazil and India (India currently at 25% until full rate applies)
25% & 35% – Tariffs on Mexico and Canada (Mexico’s increase temporarily paused)
Historical Context
18.3%
Average effective tariff rate (highest since 1934)
17.3% – After consumer shifts (highest since 1935)
Household Impact
+1.8%
Short-term consumer price increase expected
$2,400 – Average household income loss (short-term estimate)
$1,300 – Loss for lowest-income households before adjusting spending
$2,000 – Loss for lowest-income households after adjustments
products they buy to reduce their expenses.
Economic Outlook
In a separate interview, economist Ángel Rivera Montañez warned of the risks of reducing discretionary spending, which could negatively affect the local economy, which has already shown signs of a slowdown.
“The big risk is that personal consumption will decline, or that its growth rate will slow dramatically, considering that it accounts for two-thirds of economic activity. This is a constant concern for us as economists,” said Rivera Montañez.
The same concern was shared by Leslie Adames, director of economic analysis and policy at Estudios Técnicos Inc. (ETI), who emphasized that between 2015 and 2019 personal consumption spending accounted for 92% of Puerto Rico’s Gross National Product (GNP).
“Any slowdown in personal consumption spending resulting from, first, higher interest rates; second, rising product prices; and third, reduced consumer purchasing power will affect Puerto Rico’s expected economic growth,” Adames explained.
While the possibility of a recession has diminished, the threat of stagflation is beginning to surface, according to both local and national economists, a reality that will become clearer in the upcoming months.
Sector-Specific Impact +40%
Short-term increase in footwear prices
+38% – Short-term increase in clothing/apparel prices
+19% – Long-run increase in shoe prices
+17% – Long-run increase in clothing prices
Puerto Rico Cost of Living +15%–16%
Puerto Rico’s cost of living increase (2020 - 2025)
+26% – Food price increase in Puerto Rico (2020 - 2025)
70% – Imports in Puerto Rico that come from the U.S.
Bad Bunny’s Residency:
driving Tourism, Investment, and Global Exposure for the Island
Experts reflect on Puerto Rico’s potential to host large-scale, billion-dollar events
Victoria Carolina Méndez Delgado
>Wjournalpr
Bad Bunny’s residency has extended the peak of Puerto Rico’s tourist season — which typically ends in September — generating a “multiplier effect” on the local economy and placing the island’s brand on the global entertainment tourism map, experts interviewed by THE NEWS JOURNAL agreed.
In fact, according to data from 2024, about 30% of tourists who visit Puerto Rico include nightlife events and concerts — both in large venues and smaller spaces — in their plans, said Ricardo Cortés, spokesperson for Discover Puerto Rico.
“Forty percent use concerts specifically as a way to explore a destination,” he stated.
The executive said that the concert series, titled “No me quiero ir de aquí” (“I Don’t Want to Leave”) not only “tests the destination’s capacity” but also “puts it on the map in the international market,” alongside cities
recognized for hosting large-scale events, such as Las Vegas and New York.
According to an April study led by economist Indira Luciano Montalvo, Bad Bunny’s residency is expected to generate an estimated economic impact of $53.5 million, of which $27 million comes directly from attendees’ spending on goods and services such as food, transportation, and lodging.
The projected indirect impact reaches $26.5 million, while spending associated with audience attendance — excluding ticket sales — is expected to generate approximately $3.1 million in sales and tax revenue.
Luciano, an associate professor in the Department of Economics at the University of Puerto Rico, Río Piedras Campus, noted that her estimates were “too conservative” as they did not fully capture the magnitude of audience spending and event production.
“In the long term, there is also the element of Puerto Rico’s image or brand, which can turn current activity into future economic activity and potentially help sustain what is
happening now over time,” she said, anticipating it could surpass $200 million.
Precisely, data from Puerto Rico Tourism Company indicates that the residency, which began on July 11 and ends on September 14, has generated an estimated economic impact of over $200 million.
Promoter Move Concerts partner Alejandro Pabón, told this outlet in June that the production of “No me quiero ir de aquí” was expected to be more expensive than Bad Bunny’s “P FKN R” tour held in 2021 at the Hiram Bithorn Stadium, which had an investment of $10 million.
In July, hotel occupancy rose 6%, reaching 85% compared to 79% at the same time last year. For August, a 10.1% increase is expected (from 74.9% to 85%), and in September, 12.2% (from 51.8% to 64%). For shortterm rentals, such as Airbnbs, an increase of 26% is projected during weekends with shows.
Tourism officials estimate that approximately two million people will pass through Luis Muñoz Marín International Airport in San Juan as a result of the event, with 40% of that traffic made up of international visitors.
“Traditionally, we have received visitors interested in sun, beach, and culture. However, during these months, we have seen a shift toward a younger, more diverse, and
global audience attracted by musical and cultural experiences,” said Tourism Director Willianette Robles.
Tourism Occupancy Growth
According to Discover Puerto Rico, committed hotel occupancy for July was 79%, a 1% decrease from the previous year. For August, hotel bookings rose 12%, and for September, 16%. For short-term rentals, bookings in August totaled 219,588 nights while September registered 67,013 nights.
Discover Puerto Rico and the company Vibee also reported package sales that generated more than 37,500 room nights across 34 hotels.
Regarding air traffic, there was a 7% increase compared to 2024, registering 3,577,216 passengers up to June, compared to 3,358,022 for the same time last year.
“We’re starting this quarter with an event that attracts and drives additional tourism during a low season, following the concert series. October, November, and December also look mostly positive, both for hotels and short-term rentals,” added Cortés.
It’s worth noting that in 2024, the year in which Puerto Rico received 11.7 million visitors, direct tourism spending generated a total economic impact of $18.0 billion. This included $8.6 billion in Gross Domestic
Bad Bunny’s residency at the Coliseo de Puerto Rico could establish a new business model. >Yadiel Pérez/EL VOCERO
40% (of people who regularly travel) use concerts specifically as a way to explore a destination
Ricardo Cortés, spokesperson for Discover Puerto Rico.
Product (GDP), approximately 141,000 jobs created, and $1.3 billion in state and local tax revenue. Average spending per trip was $1,009 for non-resident visitors and $939 for residents.
Phenomenon or Business Model?
According to creative economy expert Javier Hernández, Puerto Rico has historically excelled in the musical ecosystem, particularly in the creation and production of genres such as salsa, merengue, and urban music.
“Everyone wants to come here to see Ismael Rivera’s tomb, go to the National Salsa Day, go to Ponce to see Héctor Lavoe’s tomb, (to see) where he grew up… The residency has been very successful in designing the complete pack age: the artist, the show, the city… This enhances the visitor experience,” the professor noted.
Meanwhile, Luciano emphasized that Puerto Rico’s “resources” have traditionally been the main tourist at traction, “a very tradi tional Caribbean tourism model: sun, beach, hotel.”
term and ensure that our infrastructure works. That is purely the government’s responsibility. We can produce; we have the talent, technical, artistic, and production skills. But electrical infrastructure, transportation, roads, air traffic—those are exclusively the government’s responsibility,” Hernández stated.
For Hernández, “the key is to understand that this must happen at many levels, like a massive event in the Coliseum, but also with festivals in towns, as well as live music ecosystems in cities, in public squares. There has to be a system where we have enough tourism products for visitors’ stays… Bad Bunny’s residency might happen again, but there could be a shorter residency by an-
However, she welcomes the idea of diversifying the local productive structure, aware that it promotes economic development. “When we do well in these industries, of course, they will generate growth, employment, production. However, when these industries weaken, the entire productive structure will weaken,” the economist warned.
So, What’s Missing?
Interviewees pointed to infrastructure as the common denominator to consolidate entertainment tourism in Puerto Rico.
“We have to be consistent in the long
Meanwhile, Flores warned that this type of tourism is guided by trends and mass consumption patterns, requiring strategic planning.
“Puerto Rico already had a strong reputation as the birthplace of great musical talents and a captivating destination... (The residency) is an opportunity to continue developing entertainment tourism as a stable and sustainable industry, as long as we keep investing in infrastructure, local talent, and cultural promotion… It is key to continue developing authentic and innovative offerings, invest in local talent, decentralize tourism, and strengthen our public-private partnerships,” she said.
Luciano highlighted that these initiatives can boost local production. “Perhaps this vision of the industry being more directed toward elevating and showcasing our heritage and culture could lead to more local production linked to providing services to local visitors. On the other hand, it also has regional development implications. In other words, it will really bring benefits to communities across Puerto Rico.”
ADefining
Francisco Rodríguez-Castro
>President & CEO of Birling Capital Advisors
As 2025 progresses, the global economy finds itself in a fragile balance: inflation is retreating, yet growth remains uneven. Tariff tensions and energy realignments are reshaping supply chains, while demographic headwinds and debt overhangs weigh on advanced economies.
The United States has managed to chart a path of resilience, with steady growth and inflation trending lower, suggesting a possible “soft landing.” Europe, however, remains trapped in stagnation, while Asia’s emerging economies — particularly India and China — continue to anchor global expansion.
Puerto Rico sits at the crossroads of these trends, experiencing both progress and persistent challenges. Its banking sector and stock index outperform Wall Street, and tourism has reached record highs. Yet inequality, labor force disengagement, and demographic decline are holding the island back. The sudden dismissal of the Financial Oversight and Management Board has further clouded fiscal governance, underscoring the urgency of decisive leadership.
History teaches us that disruption creates inflection points. Operation Bootstrap reshaped Puerto Rico in the 20th century. Now, amid global uncertainty, the island faces another defining choice: to drift into stagnation or to build a foundation for renewal. Delay is no longer an option. At Birling Capital, we believe this renewal depends on a comprehensive strategy built on Four Transformational Pillars, each measurable, actionable, and capable of unlocking $37.45 billion in GDP growth.
The Global Picture: Slowing Growth, Persistent Divergence
Global Growth: The IMF projects global GDP growth to moderate from 3.3% in 2024
Birling U.S. Bank Index beats them all with 20.77% YTD.
The four Puerto Rico public companies, all constituents of the Birling PR Stock Index, demonstrate strong fundamentals: Popular, Inc. (BPOP): 25.45% YTD
Package eliminating over 50 outdated rules. Together, these cut red tape, open opportunities for entrepreneurs, and strengthen Puerto Rico’s competitiveness.
to 2.8% in 2025, stabilizing at around 3.0% in 2026.
United States: Growth slows to 1.8% in 2025 and to 1.7% in 2026 after 2.8% in 2024.
Euro Area: Falls to 0.8% in 2025 and 1.10% in 2026, from 0.80% in 2024. Notably, Germany remains flat at 0.0%, while Spain outpaces its peers at 2.5%.
Emerging Asia: India strong at 6.2%, China steady at 4.0%.
Puerto Rico: Growth decelerates to 1.1% in 2025 and just 0.5% in 2026.
The world economy is fragmenting into regions of resilience and stagnation — and Puerto Rico, though tied to U.S. strength, remains constrained by its structural weaknesses.
The U.S. Economy: Resilience Meets Moderation
The U.S. economy remains stronger than expected. The Atlanta Fed’s GDPNow places Q3 2025 growth at 2.5%, supported by steady consumption. Inflation is gradually converging toward the Federal Reserve’s target, with June CPI at 2.7% and Core PCE at 3.05%.
The Fed’s Projections Signal a Gradual Easing Cycle:
Fed Funds Rate: 3.9% in 2025, falling to 3.4% by 2027.
Inflation: Headline and core decline toward 2.1% by 2027.
GDP Growth: Moderate expansion of 1.4–1.8% through 2027.
This trajectory suggests a rare “soft landing”: inflation containment without recession.
Markets: Puerto Rico’s Index Outpaces Wall Street
Equity markets continue to advance. As of August 15, 2025, the NASDAQ leads with 11.97%, the S&P 500 has 9.66% YTD, and the Dow Jones has 5.65%. Meanwhile, local Puerto Rico indexes show the Birling Capital PR Stock Index at 13.05% YTD, and the
First Bancorp (FBP): 13.77% YTD Evertec (EVTC): 6.43% YTD
OFG Bancorp (OFG): 0.71% YTD
Puerto Rico’s financial institutions not only remain stable; they are outperforming their U.S. peers, — a testament to both resilience and discipline.
The Four Transformational Pillars for Puerto Rico
Each pillar addresses a fundamental structural weakness. Together, they provide a blueprint to transform Puerto Rico into a competitive, resilient, and inclusive economy.
Puerto Rico is at a defining moment. The global economy is slowing, the United States is striking a balance between resilience and moderation, and local markets are exhibiting both promise and fragility. Yet Puerto Rico’s long-term challenges — demographic decline, low labor force participation, weak infrastructure, and persistent poverty — remain unresolved.
History shows that moments of disruption create opportunities for reinvention. Just as Operation Bootstrap transformed Puerto Rico in the mid-20th century, the island today must embrace bold, measurable reforms to secure its future.
At Birling Capital, we believe Puerto Rico’s path forward is anchored in Four Transformational Pillars. These pillars are not abstract policy recommendations; they are strategic imperatives — each directly measurable in GDP growth and capable of unleashing a combined $37.45 billion in economic expansion.
For reference, the Institute of Economic Freedom has led efforts to amend, eliminate, or transform over 50 laws that restrict Puerto Rico’s economic freedom. Notably, it secured two victories: the Universal Recognition of Occupational Licenses, which allows professionals licensed in U.S. states to work in Puerto Rico, and a Senate Licensing Reform
Without them, Puerto Rico risks drift and decline. With them, the island can transform fragility into competitiveness, dependency into productivity, and inequality into inclusion.
Pillar 1: Reliable & Resilient Infrastructure
Infrastructure is not just concrete and steel — it is the skeleton of Puerto Rico’s competitiveness. Years of underinvestment and the fragility of the energy grid have weakened the island’s growth potential.
Infrastructure Investment: Modernizing roads, ports, airports, broadband, and water systems can add $5.35 billion in GDP by improving logistics efficiency, reducing transport costs, and enabling new trade flows.
Energy & Climate Resilience: A reliable power supply and resilient infrastructure reduce costly business downtime, attract investment, and enable consistent industrial output. Modernizing the grid with natural gas, renewables, and storage — while integrating flood control and water security systems — transforms vulnerability into longterm competitiveness.
Infrastructure is the platform upon which every other pillar depends. Without it, no economic transformation is sustainable.
Pillar 2: Economic Freedom & Competitiveness
Puerto Rico’s economy remains hindered by excessive regulation, a complex tax code, and structural inefficiencies. These barriers discourage entrepreneurship and keep capital on the sidelines.
Regulatory Reforms: Streamlining permits, eliminating at least 50 outdated laws, and reducing barriers to market entry could generate $7.49 billion in GDP.
Tax Simplification: A pro-growth tax code, aligned with competitiveness, will encourage business formation, investment, and reinvestment — contributing $4.28 billion in GDP.
Trade Liberalization: Reducing barriers to import/export, leveraging U.S. free trade agreements, and optimizing port operations could
WEDNESDAY, AUGUST 20, 2025
deliver an additional $6.42 billion in GDP. Together, these reforms represent $18.19 billion in new GDP, nearly half of the total potential from the Four Pillars. With decisive execution, Puerto Rico can become the manufacturing backbone of U.S. nearshoring — particularly in pharmaceuticals, medical devices, and advanced manufacturing — while also diversifying tourism beyond San Juan into cultural, eco, and sports tourism markets.
Pillar 3: Workforce & Human Capital Development
Puerto Rico’s greatest untapped resource is its people. With only 45.1% labor participation, the island is leaving half its productive potential idle.
Labor Market Modernization: Expanding childcare, mobility programs, and wage subsidies — while reforming unemployment benefits to incentivize work — could add $5.35 billion in GDP by raising participation and productivity.
Skill Alignment & Apprenticeships:
Aligning K-12, technical, and university curricula with industry demand accelerates job creation in high-value sectors, such as aerospace, healthcare, advanced manufacturing, and fintech. Expanding vocational training, trade schools, and apprenticeships builds the skilled workforce required for reconstruction, renewable energy, and industrial services.
Puerto Rico’s long-term growth cannot
come from federal transfers; it must come from activating its own people. Human capital is the engine of competitiveness.
Pillar 4: Social Equity & Governance Excellence
An economy cannot thrive if half its people live in poverty and governance remains weak. Puerto Rico’s poverty rate of 43% and its systemic governance challenges are structural brakes on growth.
Tech & Innovation Support: A fully digitized government — with AI-enabled services, one-stop portals, and innovation hubs — could add $8.56 billion in GDP by reducing transaction costs, enabling startups, and scaling high-tech industries.
Transparent & Efficient Governance: Enforcing fiscal discipline, streamlining procurement, and embedding e-government reforms foster investor confidence, reduce risk premiums, and attract capital.
Equity in Healthcare & Housing: Achieving healthcare parity with U.S. states, expanding affordable housing, and revitalizing urban centers will not only address social inequity but also reverse demographic decline by keeping families on the island.
This pillar ensures that growth translates into broad-based prosperity — not just improved metrics. By embedding transparency, equity, and innovation at the heart of governance, Puerto Rico can secure both economic stability and social legitimacy.
The Path is Measurable with the Four Pillars
Infrastructure: +$5.35B GDP
Economic Freedom & Competitiveness: +$18.19B GDP
Human Capital: +$5.35B GDP
Equity & Governance: +$8.56B GDP
How the Impact Unfolds:
The measurable effect of the Four Pillars begins in late 2025, when reforms start to take hold. Puerto Rico’s baseline growth is modest, at 0.6% in 2024, 1.2% in 2025, and approximately 0.5% in both 2026 and 2027, which will leave GDP at roughly $119 billion by 2027. With the Four Pillars fully implemented, growth accelerates:
tions; they are levers of transformation capable of converting stagnation into prosperity.
The Final Word: Building Puerto Rico’s Future
Global Economy (2025)
2.8% – Global GDP growth (down from 3.3% in 2024)
1.8% – U.S. growth (vs. 2.8% in 2024)
0.8% – Euro Area growth
6.2% – India growth
4.0% – China growth
2026: GDP rises to $125 billion, with a GDP growth rate of 6.2% as infrastructure, competitiveness, and workforce reforms kick in.
2027: GDP surges to $136 billion, with a GDP Growth rate of 9.0% as governance reforms, digitization, and equity measures reach full scale.
That is $37.45 billion in potential GDP growth — not theory, but a measurable opportunity. These pillars are not policy sugges-
Puerto Rico stands at a crossroads. Global growth is slowing, the U.S. economy is stabilizing, and local markets show both resilience and fragility. The dismissal of the Oversight Board, the slow execution of reconstruction funds, and accelerating demographic decline underscore how precarious the island’s trajectory has become.
But Puerto Rico has the tools to change its future. With a strong banking sector, record tourism, billions in unused federal funds, and strategic industries poised for expansion, the island does not lack resources. What it needs is execution, urgency, and vision.
The Four Transformational Pillars provide that vision. They address root causes, not symptoms. They transform fragility into competitiveness, dependency into productivity, and inequality into inclusion.
The opportunity is measurable. The path is clear. The responsibility is ours.
KIA SPORTAGE
TOYOTA
An economic Engine with massive potential
Pablo Bauzá Oller >Wjournalpr
In Puerto Rico, sports serve as one of the many pillars of society, creating lasting bonds in communities, while evoking feelings of pride and love throughout the island. They are a unifier, almost a belief or deity that people gravitate towards. They’ve also provided something more than entertainment to the island: impact. More specifically, economic impact.
It may be through youth tournaments, surfing competitions, or Puerto Rico’s very own PGA tour event, the Puerto Rico Open. All these events have provided a bonanza of both local and outside tourism for the island. Recently, however, there has been a shift in the island’s status as a global epicenter for sports.
The arrival of global superstars like Carlos Alcaraz, global brands like Real Madrid and Barcelona, and now for the first time since 2006, two NBA teams in the island, have started to cement Puerto Rico’s status as one of the world’s top destinations for international sporting events.
For VRDG Group CEO and founder Julio Cabral, this change in status for the island has come from a global handshake between the digitization and commercialization of content. VRDG Group’s entertainment division has been responsible for bringing in Al-
caraz, the NBA, Real Madrid and Barcelona, among other events, to the island.
“Within that content, you find all the streaming and broadcasting of all these global events like World Baseball Classic, Formula 1, festivals like Ultra in Miami, and Puerto Rico has a lot of that,” said Cabral to EL VOCERO. “I would argue that a very important segment of Puerto Rico’s exports are that active intangible that is music, entertainment and culture, which attracts all these other important segments like sports to look at Puerto Rico as a gravitational center for entertainment.”
Those key exports work hand in hand with what Cabral describes as the island’s atmosphere, to create that image and status for outsiders.
“I think that Puerto Rico has an ecosystem that attracts these types of events. Puerto Rico has gastronomy, the culture, the island is like a movie in itself because you have the mountains but also the ability to go to the beach close by, so you have all these factors, including infrastructure like the Coliseo de Puerto Rico, that make it an attractive location that makes all these global teams and talents look at Puerto Rico as a market to capitalize on,” said Cabral.
The Francis Tiafoe vs. Carlos Alcaraz exhibition match in March left a reported $6.7 million in economic impact. The legends game between Real Madrid and Barcelona, also in
Julio Cabral, CEO and founder VRDG Group.
March, left a reported impact of $10.7 million.
Other than these events, Discover Puerto Rico reported that between July and Septem ber of 2024, their events and conventions sector, which includes sports, generated over $35 million in sales. That represented an in crease of $7.5 million in tourism revenue from that same time frame in 2023.
Cabral believes that this impact on tour ism comes as a ricochet from the fruits of the entertainment industry’s labor.
“That’s called a domino effect in the economy, the entertainment industry has a certain ‘sazón’ that creates different sourc es of income and diversification that other industries don’t have,” said Cabral. “In the entertainment industry, if you are coming from outside the island you have to spend on flights, get a hotel, pay the IVU, pay for park ing or an Uber, spend on food and beverage
WORLD’S FIRST CRISTALINO TEQUILA
generated by events & conventions (July–Sept 2024)
million
