Puerto Rico Earthquake and Virus Cut Revenue by $1 Billion

(Bloomberg) -- Earthquakes that rocked Puerto Rico in January and the coronavirus pandemic cost the island $1.1 billion in estimated revenue as Governor Wanda Vazquez closed almost all non-essential activity to help stop the spread of the virus.

Puerto Rico’s revenue for the year that ended June 30 fell short of initial forecasts by $1.1 billion, Francisco Parés Alicea, Puerto Rico’s Treasury Secretary, said in a statement Wednesday. While the revenue collections are down from what was first expected, the $9.29 billion that Puerto Rico brought in for fiscal year 2020 is $276 million more than the revised revenue projections made on May 27.

The amount of Puerto Rico’s revenue collections will help determine how much the island can repay its creditors. The U.S. territory is seeking to reduce nearly $18 billion of debt backed by the commonwealth. An oversight board that manages Puerto Rico’s bankruptcy in May cut $15 billion from the estimated amount available to pay principal and interest through 2032 after the virus stalled the island’s economy.

Puerto Rico’s oversight board, which manages the commonwealth’s finances, disagrees with the Treasury Department’s calculations, saying the government failed to include tax payments pushed into the fiscal 2021 year. Counting those funds would increase the 2020 collections to $9.6 billion, the board said in a statement Wednesday.

Puerto Rico’s tax receipts were strong in the first seven months of fiscal 2020, coming in at $667 million above original estimates. A 6.4-magnitude earthquake in January, additional aftershocks and the coronavirus changed that as revenue collections from February through July were $1.78 billion below the original budget forecast, with corporate, sales and individual tax receipts falling the most.

Officials revised the revenue projections on May 27 to reflect the sharp decline in economic activity.

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