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SOURCE Government Development Bank for Puerto Rico (GDB)
SAN JUAN, Puerto Rico, Sept. 30, 2013 /PRNewswire-USNewswire/ -- Today, Treasury Secretary Melba Acosta Febo and Government Development Bank for Puerto Rico (GDB) Interim President José V. Pagán Beauchamp commented on the announcement by Standard & Poor's that it has reaffirmed its ratings on outstanding Sales Tax Fund Financing Corporation (COFINA, by its Spanish acronym) bonds, and provided an update on the significant measures the Commonwealth has taken this year to strengthen its fiscal situation and promote economic growth.
"We are pleased that S&P has reaffirmed its ratings on the COFINAI and COFINA II bonds. We are also encouraged by S&P's focus on COFINA's strengths, such as a large and stable tax base, a robust legal structure designed to protect bondholders and strong historical coverage levels, as well as their recognition of the positive impact the recent expansion of the Sales and Use Tax (SUT) base will have on the credit. The SUT remains an important source of revenue for the Commonwealth, with SUT proceeds growing at an average annual rate of 2.4% over the past four years and expected to grow significantly in FY 2014 once the 28.7% expansion of its tax base is fully implemented. With regard to the change in outlook, we are confident that we can make continued, significant progress on our fiscal and economic development plans within S&P's two-year horizon."
"Since January, this administration has implemented a number of very significant actions to strengthen Puerto Rico's fiscal situation, including an unprecedented reform of our pension system, measures to create self-sufficiency at our public corporations, and increased tax revenues. These actions support sustainable economic growth through job creation and continued progress towards a balanced budget," said Melba Acosta Febo, Secretary of the Treasury and Chief Public Financial Officer of the Commonwealth of Puerto Rico. "As we continue to implement these measures, we are maintaining an ongoing dialog with the investment community, including the ratings agencies, to ensure a clear understanding of our plan, our progress and our improving prospects."
Actions the administration has taken to strengthen the Commonwealth's fiscal situation, promote economic growth, and support its credit standing include the following:
José Pagan concluded: "We believe these measures, along with additional measures that are in the process of implementation, will spur economic growth as Puerto Rico moves forward with its robust plan to cut its budget deficit in half by 2015 and achieve a fully balanced budget by 2016. The Government Development Bank for Puerto Rico is working to complete our financing plan, which has been adjusted to account for ongoing market fluctuations and the private liquidity transactions the GDB has recently completed. This plan contemplates a possible COFINA III bond issue later this year, pending market conditions. We currently have a range of additional liquidity options. Banks and other financial institutions continue to lend to the Commonwealth, as evidenced by a $125 million Tax and Revenue Anticipation Note closed with Bank of America on September 27."
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