Relief funds accelerate in Puerto Rico
The wave of stimulus funding began with $ 8 billion approved under the administration of former President Donald Trump, and Biden’s additional funds could finish the job of restarting the local economy.
“These funds are temporary and will have a limited long-term impact on Puerto Rico’s economy, but are clearly positive for the territory’s finances in the short term,” Moody’s assistant vice president Pisei Chea told the ‘bond buyer.
The economy has been slipping for two years, suffering the double blow of natural disasters and the COVID-19 pandemic. Hurricane Maria hit more than 786,000 homes on the island in September 2017, killing nearly 3,000 people and causing nearly $ 100 billion in damage.
Since the start of the pandemic, at least 94,336 cases of COVID-19 have been confirmed in Puerto Rico, an island of 3.2 million people, NBC News reported in March. The virus has killed at least 2,073 people on the island so far, NBC reported.
Predicting a double recovery that will be difficult, the Puerto Rican government’s March draft of the 2021 financial plan projects the economy to fall 3.6% in 2021, following a 1.4% drop in 2020, the Weekly Journal reported. .
The island’s GDP was estimated at $ 105 billion in 2019, near its peak. The island has a relatively high GDP per capita compared to other Latin American economies, at nearly $ 33,000 per year. Consumer spending, however, has slowed.
The retail sector has been hit hard, with estimated sales losses of $ 2 billion in 2020 and an associated layoff of more than half of the segment’s workforce. But signs of recovery are emerging. The Ministry of Economic Development and Trade (DDEC) reported that in December 2020, retail sales amounted to $ 3.1 billion, up 5.1% from the month of the previous year. in 2019. As part of the increase, sales of hardware and household materials rose 42%, the agency reported.
Among the multinational DIY retailers that have helped Puerto Rico is The Home Depot, which pledged $ 250,000 a year ago in response to natural disasters that rocked the island. In 2019, The Homer Fund provided more than $ 1 million to needy store associates.
“Our hearts go out to our associates, customers and communities affected by the ongoing Puerto Rico earthquake,” said Shannon Gerber, Executive Director of The Home Depot Foundation, at the time of engagement. “We are committed to long-term recovery efforts in Puerto Rico since Hurricane Maria in 2017 and will continue to work closely with our non-profit partners to provide assistance to communities affected by earthquakes.” , she said in a statement.
Likewise, Lanco provides direct aid and coordinates donations to the island through groups like United for Puerto Rico, which has already awarded $ 1.9 million to nine nonprofits that will provide relief to the people. people most affected by Hurricane María.
Following Maria, Lanco invested $ 2 million to renovate its headquarters in San Lorenzo, Puerto Rico, including a back-up power system.
The new federal funding is expected to help the housing market in Puerto Rico fully recover. Last year, more than 100,000 homes on the island of 3.6 million people were rebuilt, while some 30,000 homeowners requested public funds to rebuild their homes.
Most of the housing investment comes from FEMA, which coordinates its assistance through the Puerto Rico Central Rehabilitation, Reconstruction and Resilience Office, or COR3.
Another entity supporting housing reconstruction is Puerto Rico Housing, which has rolled out the Community Development Block Grant – Disaster Recovery Action Plan, with $ 800 million earmarked for 2021 loans. The program provides grants. Long-term low-interest loans of up to $ 50 million for commercial, mixed-use and infrastructure developments.
A new project funded by Puerto Rico Housing was the start of construction in March of Hogar Manuel Mediavilla Negrón III, a new $ 26 million housing project for the elderly, in Humacao.
In addition to rebuilding traditional housing on the island, a wave of new luxury home construction is underway, largely serving a community of investors in the Americas, according to Mansion Global.
Among the paint companies that are well positioned to benefit from the increased demand in Puerto Rico is Lanco Paints, which manufactures on the island of San Lorenzo, among others. Regionally, Lanco has 10 manufacturing plants and six distribution centers.
Lanco announced in early 2020 its intention to invest $ 20 million in new manufacturing plants in Chile, Guatemala, in order to expand its presence in the regional market beyond distribution. “We’re talking about paint (which) put us in direct competition with Sherwin-Williams and PPG, which wouldn’t have been possible if our products hadn’t been designed to withstand whatever nature throws at us. in Puerto Rico, ”said Juan Pablo Gaztambide, President of Lanco USA, in an interview with El Nuevo Dia.
Other players in Puerto Rico’s paint and coatings market include Harris Paints, which in Bayamón produces more than 3,000,000 gallons and 6,000,000 spray cans to meet regional demand, according to the company’s website. . Harris has seven stores on the island and a network of distributors.
Multinational players on the island include PPG and Master Paints & Chemical. DIY distributors include Home Depot, which has 10 branches on the island.
Besides the need for replacement and new housing, infrastructure projects are also underway on the island. Almost all of Puerto Rico’s buildings were damaged by Hurricane Maria, the Federal Emergency Management Agency (FEMA) found in a study.
A $ 6.5 million loan (FEMA) earlier this year will rebuild the Coliseum José Miguel Agrelot and Bahía Urbana, two of the island’s largest arts and entertainment venues. The entertainment industry in Puerto Rico generates nearly $ 2 billion in revenue per year and supports 30,000 direct and indirect jobs.
Other investments underway in the tourism industry include new hotels, like the Four Seasons Cayo Largo, covering more than 600 acres of waterfront on Puerto Rico’s northeast coast, with a planned start in the third. quarter 2021.
Likewise, the Residence Inn by Marriott Isla Verde near San Juan was recently renovated and is now open.
Puerto Rico declared bankruptcy in May 2017, affecting $ 70 billion in loan debt and $ 50 billion in pension liabilities. Recently, however, financial entities have started to refinance much of the island’s debt.
In February, a settlement was announced with bondholders and with the Supervisory and Financial Management Board to restructure $ 18.8 billion in debt, as part of a deal to help the government recover. recover from bankruptcy.