Ten Years Into PROMESA, Report Concludes Puerto Rico Lived Through "A Lost Decade"

It has now been 10 years since PROMESA and its Fiscal Control Board deepened the colonial status and inaugurated an antidemocratic regime in Puerto Rico. The report "La Década Perdida" ("The Lost Decade") examines, through multiple lenses, how — in the name of debt restructuring — the Board has carried out severe attacks on essential public services and local autonomy. Produced in collaboration by Right to Democracy, the Citizens' Commission for the Comprehensive Audit of the Public Credit, Sembrando Sentido, and the League of Cities, the report refutes the narrative of the Board's supposed "success" and examines how the true roots of Puerto Rico's crises remain present today.

Citizens' Commission for the Comprehensive Audit of the Public Credit

The report concludes that, after ten years of improvisation and mistakes, the Fiscal Control Board deteriorated public finances and the country's quality of life without addressing the true roots of the crisis. The document argues that austerity imposed without measuring its impact, greater dependence on federal funds, privatizations, and the rising cost of services all served to secure agreements with bondholders that are unpayable and that bind Puerto Rico for decades to come.

The report analyzes the data the Board presents on the benefits and savings it claims to have generated for the country through debt restructuring and its fiscal strategy; it reviews the impacts of its austerity measures and their negative institutional impact on municipalities, particularly the elimination of the Equalization Fund and the transformation of the municipal financing model between 2017 and 2024; third, on public governance issues, it discusses the use of public contracting and privatization as a mechanism for government reform without first addressing the State's deficiencies; fourth, it analyzes the impact the Board has had on its control over the Legislative Assembly, framed within a broader questioning of PROMESA's democratic legitimacy.

"With this publication we reconfirm that the Board doesn't save us money — it costs us. Beyond its multimillion-dollar operating expenses, what it calls 'savings' for the people is a failed attempt to justify its true costs to Puerto Rico. In its reports it omits billions of dollars in cash payments and extra bonuses to bondholders when it presents its calculations on the debt cut, which makes its estimated savings misleading. In practice, far more has had to be paid to bondholders than was announced — from $10 billion in cash payments at the signing of the agreements to extra annual payments that already total more than $1.5 billion."

The document argues that the Board's strategy has not been very different from the administrations that brought on the crisis in the first place, and can be summed up in three themes: fiscal matters, austerity measures, and an ever-growing dependence on federal funds; and, simultaneously, the promotion of "structural reforms" supposedly meant to facilitate economic growth. According to the analysis, these policies only worsened living conditions in the country.

"The disconnect between PROMESA and the real causes of the crisis is evident. Priority was given to paying down the debt and balancing the budget, leaving intact the economic and political model that caused the stagnation and created the conditions for massive public debt. Ten years later, we remain under the same model that bankrupted us."

The analysis argues that the regime sustained itself not through its own measures, but thanks to the massive infusion of federal funds that produced a modest economic recovery. But instead of using that extraordinary window of opportunity to lay the groundwork for sustainable fiscal recovery, the Board used it to negotiate larger debt payments, prioritizing bondholders' interests over the country's future sustainability.

The League of Cities

The institutional cost is felt with particular severity in the municipalities and in the weakening of the State: between 2017 and 2024, certified fiscal plans transformed the municipal financing model. The elimination of the Equalization Fund proceeded through concrete, cumulative cuts, while the Board promised alternatives to replace those resources that never materialized. An important fiscal support mechanism was dismantled without establishing another capable of compensating for it.

"We also warn that, under the Board's oversight, public contracting and privatization have become consolidated as the primary mechanism for government reform, without first addressing the State's institutional deficiencies. This has increased the risk of inefficiencies, capture of public resources, lack of effective competition, and a weakened government capacity to provide, monitor, and evaluate essential services."

Sembrando Sentido

As part of the "La Década Perdida" report, Sembrando Sentido presented an analysis of contracting and privatization over the Board's ten years.

"We think it's important to start by clarifying that although contracts like LUMA and Genera are perhaps the most visible faces of privatization, these cases are part of a much broader pattern: the growing dependence on third parties to deliver services and carry out public functions."

Before the Board's arrival, roughly 30% of the Government of Puerto Rico's budget went toward private contracting. Today, that figure has risen to about 59% of the government budget.

"That's why, beyond looking at what and why something is contracted, we have to look at how it's contracted: how we determine the need to contract; how we choose who will carry out the work; how (or whether) competitive processes are followed; how we evaluate the contractor's operational and financial capacity; and how we monitor their work and results.

"And at every one of these stages we see major weaknesses with real consequences. Using global parameters on the losses associated with deficiencies in public contracting, we estimate that Puerto Rico could already be losing between $1.9 and $4.8 billion a year.

"That's billions of dollars unavailable to fix our schools, improve essential services, install solar energy systems, or invest in the infrastructure our communities need. In other words, we may be approving multimillion-dollar contracts without independently evaluating the real need for the contract, possible conflicts of interest, the contractor's track record, or their operational and financial capacity to deliver."

Even so, the Board has presented this review as one of its achievements in transparency and fiscal discipline. However, according to its own Contract Review Registry, less than 1% (.29%) of reviewed contract transactions have been rejected. Contracts were even found to have been approved despite the Board itself identifying deficiencies in the contracting processes, including competition problems and risks associated with the contractors selected.

"That's the underlying problem: the Board and the Government keep patching cracks we've known about for years. And meanwhile, those cracks have kept growing and crumbling the whole system.

"In our 2022 Assessment of Public Contracting Processes in PR, we identified numerous problems in contracting, among them: an extensive, confusing, and fragmented framework of laws and regulations; large areas without competition, particularly in professional services, public-private partnerships, and waste management; almost nonexistent regulation of subcontracting; and significant gaps in transparency, monitoring, and performance evaluation.

"Four years later, that long list of problems in contracting still stands.

"After ten years, success can't be measured by how many contracts the Board reviewed. It has to be measured by whether we now have greater capacity to protect the people's resources and ensure they produce results."

Right to Democracy

The imposition of the Board and its power to nullify legislation represent an intensification of the United States' colonial legal framework over the territories legalized by the Insular Cases, and a breach of basic democratic principles — the consent of the governed and the right to self-determination.

The Board's judicial track record is telling: of nine laws it has challenged, it has won all nine in court, while a tenth measure awaits an imminent judicial determination. Under its mandate, statutes on pensions, health, and labor rights crafted by elected representatives have been struck down, even in instances where no direct fiscal impact on the public treasury was identified. The U.S. Supreme Court's rulings on controversies surrounding PROMESA have also strengthened the Board's authority over the archipelago. These actions consolidate a colonial legal apparatus that deprives citizens of democratic tools to oversee, restrict, or transform this exercise of power.

It's worth noting that the highest U.S. judicial forum has avoided intervening in litigation where Puerto Rico challenges the Board's powers. An emblematic example is the case Pierluisi v. Junta (2023), in which certiorari was denied for a challenge to the nullification of labor reform, despite that measure not representing an adverse fiscal impact on the public treasury.

Unlike other U.S. jurisdictions where similar entities have been established, the imposition in Puerto Rico — and its power to nullify the local legislative will — deepens colonial status and violates the fundamental rights of self-determination and consent of the governed. Furthermore, the legal framework established by PROMESA could be implemented in other U.S. territories, representing a threat of expanding the existing colonial dominion over American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands.

After ten years, the fact that the Board has not delivered the benefits it promised local communities highlights that its continued impositions on democratic self-governance can no longer be justified — if they ever could have been.

The full analysis of this report is available on the Commission's website at comisionauditoriapr.org

The executive summary is available in our resources tab here.