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GDB Argues For Higher Credit Rating… Buchanan Commander Confident Base Will Stay Open… Governor Urges Private Sector To Help Fight Poverty On Island

GDB Argues For Higher Credit Rating

By Kristin Roberts

August 22, 2003
Copyright © 2003
Reuters Limited. All rights reserved. 

SAN JUAN, Puerto Rico - The head of Puerto Rico's Government Development Bank said the U.S. territory's debt should carry a higher credit rating, arguing that Wall Street analysts discriminate against the island government and fail to recognize progress.

Hector Mendez, president of the bank that acts as fiscal agent for Puerto Rico, this week said the Commonwealth should have a double-A rating instead of the A-minus now assigned by Standard & Poor's Ratings Services and the Baa1 from Moody's Investors Service.

S&P has a single-A on the Government Development Bank.

"I don't see a reason why we're not a double-A," Mendez said in an interview. "Sometimes I feel like we've been discriminated against."

Mendez said analysts do not judge Puerto Rico by the same standards applied to states and that the agencies have not recognized the progress Puerto Rico's administration has made given weak finances left by its predecessor and a bad economy.

But S&P analyst Ken Gear strongly disagreed.

"I would beg to differ," he said. "We make a very strong effort to make sure that we're not treating them differently. We do that by using other states as a comparison. We use the same scales, the same benchmarks."

"We treat them very much like they're a state," Gear said.

The Commonwealth differs from states in many ways, not least in the existence of the Government Development Bank - an entity with oversight into finances and an ability to provide lines of credit. Some states have development banks, but not with resources similar to Puerto Rico's GDB.

The Government Development Bank's $2 billion in liquid assets should be considered a "tremendous Rainy Day account," Mendez argued. S&P's Gear said those funds are already taken into consideration in the credit rating.


Mendez and S&P have disagreed since December when the agency warned Puerto Rico it could be downgraded due to questions of management controls at the bank. Some Puerto Rico debt issuers entered agreements and accessed capital without going through the appropriate steps with the Government Development Bank.

Carlos Pineiro, financing director at the bank, called the amount of money involved "immaterial" given Puerto Rico's $30 billion in debt.

Gear said it is indicative of a need to further integrate systems and ensure control at lower levels. S&P removed Puerto Rico from Credit Watch but maintains a "negative" outlook.

Bank officials noted that Moody's, which has a "stable" outlook on Puerto Rico, did not voice the same concern.

Puerto Rico is an aggressive issuer of municipal bonds. Last year, it sold $7.34 billion in debt, including $3.34 billion in refinancing. It has a 12 percent jobless rate and faces the same economic weakness hurting states' revenue.

Beyond the Commonwealth, only Washington, D.C., carries the A-minus rating from S&P, and 32 states have a double-A-minus, double-A or double-A-plus rating.

Buchanan Commander Confident Base Will Stay Open

By Melissa B. Gonzalez Valentin of WOW News

August 26, 2003
Copyright © 2003
WOW NEWS. All rights reserved. 

Buchanan U.S. Army Cmdr. Col. Edward Short assured the people of Puerto Rico on Tuesday that the military base has a good chance of remaining open, despite the recommendation of the Base Realignment and Closure Commission to include it in the list of bases to be shut down in 2005.

Short, who was the main speaker at the Rotary Club Luncheon on Tuesday, acknowledged that while new military technology has displaced Puerto Rico as a military strategic asset, the island may be invaluable in the U.S. fight against drug trafficking and terrorism.

"One of the links that we found after 9-11 was that terrorists were beginning to work in South America with drug from lords. Well, it doesn’t take a geography wiz to figure out that if you were taking drugs South America and going through the Caribbean, it would be better to have some kind of outpost in the Caribbean to try to interdict that kind of stuff," Short said.

Furthermore, the Buchanan commander highlighted the island’s importance in the military conflicts in Iraq and Afghanistan. He said five Puerto Rican soldiers have been killed so far and 900 out of 18,000 National Guard and Army Reserve soldiers have been deployed in Iraq.

"Once we give up our sons and daughters, and blood is shed, that’s it. You are strategically relevant far above a geographic location," Short said.

Among other things, Short said two of the proposals to help keep Buchanan open is to transfer the Veterans Hospital and the Military Entrance Processing Station to the base in Guaynabo.

On another note, in what seemed to be a repetition of the stance of pro-statehood leaders in Puerto Rico, Short–who was accompanied by New Progressive Party Sen. Miriam Ramirez de Ferrer–urged business leaders and Puerto Rican professionals who want the U.S. military to stay on the island to be more vocal about it.

Short said that while they are doing everything in their power to convince the Department of Defense and the U.S. Congress of the value of keeping Buchanan open, it would help if pro-military leaders in Puerto Rico voice their support to counteract the perception that people back on the U.S. mainland may have because of an anti-military and pro-independence minority in Puerto Rico.

The military commander–who declined to talk about politics or to judge Gov. Sila Calderon’s way of addressing the issue–noted the right of every citizen to voice their opinion, even when they may be perceived as anti-American and stressed that his experience on the island has been otherwise.

Governor Urges Private Sector To Help Fight Poverty On Island

By Melissa B. Gonzalez Valentin of WOW News

August 27, 2003
Copyright © 2003
WOW NEWS. All rights reserved. 

While acknowledging that more than half of the children in Puerto Rico live under the poverty level, Gov. Sila Calderon urged the private sector of the island to join her government’s efforts to fight the problem.

The governor made her statements during a press conference Wednesday to inaugurate a new Housing Department facility in Rio Piedras in reaction to published reports stating that 58% of children in Puerto Rico live in poverty.

Calderon used the opportunity to highlight the government’s efforts to improve the quality of life of low-income families. She mentioned the Special Communities Program–which has been the backbone of her administration–the rehabilitation of public housing, and the implementation of open school programs with extended hours in public schools as some of the projects she has developed for the poor.

However, Calderon acknowledged the importance of the private sector’s help in dealing with the problem.

"I believe that this effort that this government has been making to go to the root of poverty, to the root of violence and crime, must be complemented by the private sector, by the leadership of all civil, religious, and community entities of Puerto Rico to remove children from poverty and violence," the Calderon said.

When asked how her programs would help low-income families cease to be poor, the governor said she believed they were providing the required resources to empower these families through continued education courses, training, and finding jobs.

"The main purpose is that they increase their economic level. First, to change and then through that change, they can move up, and as the family moves up, so do the children," Calderon stated.

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