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Gov. Calderon Predicts 2.7% Rise In GDP For Fiscal 2003

$10 Billion To Circulate By 2003 To Revitalize Economy


December 12, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Gov. Sila Calderon said that last week’s projection by the Puerto Rico Planning Board of a 2.7% increase in Puerto Rico’s gross domestic product (GDP) for fiscal year 2003 (ends July 31, 2003) was based on the administration’s economic development strategies that were implemented in 2001 and 2002.

Calderon’s economic development council reported on the actions taken by her administration to improve the island’s employment rate and its competitiveness in the global economy. Most of the information presented referred to 27 economic development laws approved in 2001 and to capital expenditure already contemplated in the government’s budgets for fiscal years 2002 and 2003, with no significant new projects or initiatives announced.

The event was held at the government’s reception center in Old San Juan and attended by more than 300 representatives from Puerto Rico’s public and private sectors.

"Puerto Rico’s economic situation in the past two years has been very complex," said Calderon. "[Puerto Rico has been affected by situations such as] the U.S. economic recession, which had a direct effect on our economy; the Sept. 11 terrorists attacks; companies closing because of the elimination of [Internal Revenue Code] Section 936; a disastrous fiscal situation at the beginning of 2001; and a government affected by the improper use of funds.

"Our efforts to improve this complex situation were based on 12 strategies that emerged from the reality, needs, and circumstances of the island in the past two years, a product of analysis and practical deliberation," said the governor.

Members of the economic development council spoke about funds assignments and laws approved during the past two years and offered projections for 2003. Among the department secretaries presenting reports were Economic Development & Commerce’s (EDC) Ramon Cantero-Frau, Transportation & Public Works’ (DTOP) Jose Izquierdo, Agriculture’s Luis Rivero, and Labor & Human Resources’ Victor Rodriguez.

Other agency heads participating in the activity were Puerto Rico Electric Power Authority’s Hector Rosario, Aqueduct & Sewer’s Juan Agosto Alicea, Puerto Rico Economic Development Bank’s Antonio Faria, Puerto Rico Government Development Bank’s Hector Mendez, Puerto Rico Planning Board’s Angel Rodriguez, Puerto Rico Industrial Development Co.’s (Pridco) Hector Jimenez Juarbe, and Puerto Rico Tourism Co.’s Milton Segarra.

According to the EDC’s Cantero-Frau, "For the past two years, $10 billion has been pumped in different stages into the island’s economy. By the end of fiscal 2003, $3 billion will have been invested in manufacturing projects and $500 million in tourism. In 2001, $1.5 billion was invested in public works, with an additional $2 billion in 2002. For 2003, the public works sector has another $2 billion targeted, and $1 billion has been assigned for the island’s special communities. The year 2003 will be the start of an economic bonanza such as Puerto Rico hasn’t seen in a long time."

Following are some of the agencies’ most notable facts for 2001 and 2002 (unless otherwise indicated):

Aqueduct & Sewer

136.7 million invested in 672 water projects, with 55,000 electricity meters replaced and 36,985 water leaks repaired

Between 2001 and 2004, $4.3 billion has been targeted for the six economic development poles, or regions, identified on the island. Already assigned was $50 million for improvements to the Guaynabo Martinez Nadal intersection and Rio Piedras 65th Infantry; $130 million to the Eastern Corridor, formerly Route 66; $123 million for the Mayaguez-Ponce Expressway; $43 million for PR-10 from Arecibo to Ponce; and $23 million for Santiago Channel.

Economic Development Bank

The bank’s loan portfolio is $128.7 million. Average of loan principal by sector: agriculture, 30%; services, 27%; business, 23%; manufacturing, 14%; and tourism, 6%. Loan disbursements amounted to $82.7 million, generating 9,900 jobs. Loan portfolio goal is $300 million.

Government Development Bank

The bank’s liquidity increased 69.4% in fiscal year 2002, with $2.2 billion reported capital.


Between 2001 and 2003, $1.35 million will have been spent to renovate 139 public housing projects. Elderly-housing investment was $105 million for 994 units in 22 public housing projects. Santurce revitalization project assigned $900 million. 15,985 housing units constructed.

Planning Board

Ten economic indicators showed increases in first-quarter 2003, including employment (4.2%), new housing units (33.4%), total exports (9.6%), electric power consumption (2.8%), commercial power consumption (1.8%), construction permits (15.2%), private-sector construction permits (12.6%), public-sector construction permits (108%), construction permit investment (21%), and retail sales (3.2%). More than $847 million in permit investments to be handled in the first and second quarters of 2003.


253 new businesses were established with 11,296 new jobs created at a $1.1 billion investment. 110 projects were promoted with a possible 15,724 new jobs and $408 million investment. 5,200 jobs were retained with a $170 million investment.


Seven hotels opened in 2002, adding 515 rooms and 410 jobs with a $78.4 million investment. Another 17 hotels will open in 2003, adding 1,781 rooms and 1,993 jobs at a cost of $448.9 million. Construction startups are scheduled for 12 new projects, adding 2,463 rooms and 4,742 jobs with a $798.1 million investment. By February 2003, more than $175.7 million in bids will have been approved for the Puerto Rico Convention Center.

Results of Gov. Sila Calderon’s Implementation of 12 Economic Development Strategies for 2001 & 2002

27 economic development laws; economic effect measured by the EDC and Treasury. Reduction of permit process; out of more than 60 regulations, 80% have been revised; should conclude by 2002

Hedging on crude oil prices and proposed 11% reduction on power consumption for new companies and expansions to be concluded by end of 2002

8.8 billion in public and private investment committed to infrastructure, housing, and tourism projects in six economic development poles on the island; to date, $3.5 million has been invested in the startup of more than 800 projects, out of 2,000 identified.

Urban center rehabilitation assigned $165.5 million for 80 revitalization projects in 18 municipalities, to generate 2,590 employees in the construction sector; begins January 2003 and ends between December 2003 and March 2004.

Five clusters established in pharmaceutics, biotechnology, medical instruments, communication & information technology, and health services. Work Investment Act funds used to retrain 5,200 displaced workers and relocate 5,537 workers in technology companies.

Laws created to reduce tax rates on capital gains for corporations and individuals and for purchases of local goods for export; executive order for government agencies to purchase local goods; and three special funds at the Economic Development Bank to provide financing for low-income individuals to startup businesses, young entrepreneurs, and Commerce Development Administration applicants.

Laws to improve cooperative movement’s competitiveness with private sector, emphasizing the creation of new manufacturing and service cooperatives.

Strategic projects such as Port of the Americas, Convention Center, Condado Trio, Economic Poles, Agua para Todos (water project), Santurce Renovation Project, Martin Peña Channel dredging, Urban Centers Revitalization, Key to Your Home project (housing), renovation of 1,600 schools, Puerto Rico TechnoEconomic Corridor, Eastern Corridor.

Beginning in February 2003, five-year project to invest $1 billion in 686 special communities where more than one million inhabitants live, with projects that include infrastructure & housing projects such as subsidies, grants, mortgage & personal loans to buy, reconstruct, rehabilitate, repair, or make improvements to homes; and for economic development activities that generate jobs.

Startup of Puerto Rico 2025, a long-term economic and social development plan to ensure the island’s competitiveness in a growing global economy with a 20-member committee assigned.

This Caribbean Business article appears courtesy of Casiano Communications.
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