Puerto Rico lacks the capacity to fully repay its long-term liabilities, which include $50 billion in unfunded pension obligations and $74 billion owed to bondholders. While many complications naturally arise when determining how much Puerto Rico can repay its bondholders and pensioners, inconsistent economic data should not be one of them.

Unfortunately, Puerto Rico’s economic data exhibits inconsistencies that lead to significantly different outcomes regarding the Commonwealth’s repayment capacity. In this note, we examine one example of this inconsistency: the trends in nominal GDP growth compared to the trends in GDP growth adjusted for inflation (referred to as constant GDP growth).

Puerto Rico Assessment — Pension Reforms v.final

 

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