GAO Testimony: Puerto Rico - Fiscal Conditions Have Improved but Risks Remain
Description
Opening Statement by Michelle Sager, GAO Director, on July 16, 2025, on Puerto Rico's fiscal and economic conditions before the House Committee on Natural Resources, Subcommittee on Indian and Insular Affairs.
The factors that contributed to the Commonwealth of Puerto Rico's debt crisis in 2015 included the territory's persistent deficits and its use of debt to manage these deficits. In 2018, GAO identified specific causes of its deficits based on interviews with Puerto Rico officials, federal officials, and other relevant experts, along with a literature review. These causes included inadequate financial management and oversight practices, policy decisions such as using debt proceeds to balance budgets, and a prolonged economic contraction.
This statement summarizes GAO's key findings from this work related to (1) the factors that contributed to the debt crisis in Puerto Rico, (2) how fiscal and economic conditions have changed since 2016, and (3) the fiscal and economic risks that Puerto Rico faces.
The factors that contributed to the Commonwealth of Puerto Rico's debt crisis in 2015 included the territory's persistent deficits and its use of debt to manage these deficits. In 2018, GAO identified specific causes of its deficits based on interviews with Puerto Rico officials, federal officials, and other relevant experts, along with a literature review. These causes included inadequate financial management and oversight practices, policy decisions such as using debt proceeds to balance budgets, and a prolonged economic contraction.
This statement summarizes GAO's key findings from this work related to (1) the factors that contributed to the debt crisis in Puerto Rico, (2) how fiscal and economic conditions have changed since 2016, and (3) the fiscal and economic risks that Puerto Rico faces.