On June 25, 2025, Governor Jenniffer Gonzalez-Colon signed the first certified balanced budget bill since the PROMESA Financial Oversight and Management Board (FOMB) was established in 2016. Under the terms of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) law, Puerto Rico must have four consecutive years of balanced budgets in order to dissolve the Board.
While it is not clear when Puerto Rico last had a balanced budget, it was not during this century.
How to remove the FOMB
The FOMB has been unpopular in Puerto Rico, generally speaking. The Puerto Rican government has had an adversarial relationship with the board, and the current Resident Commissioner called them a “big failure” during the recent hearing on the subject.
However, PROMESA specified the terms under which the Board can be dismantled. In addition to the four consecutive years of balanced budgets, the territory must also have “adequate access to short- and long-term credit markets at reasonable interest rates to meet its borrowing needs.”
To achieve these two core requirements, the FOMB has also outlined a number of operational and fiscal goals that Puerto Rico must meet, including:
- Modified Accrual Accounting: The balanced budgets must be developed in accordance with modified accrual accounting standards.
- Fiscal Plan Compliance: The government must demonstrate its ability to adhere to the Certified Fiscal Plan.
- Timely Audited Financials: The government must consistently publish timely and audited financial statements.
- Debt Restructuring: The island’s debt must be restructured to a sustainable level, which is a prerequisite for regaining access to credit markets.
The Board’s goal is to help Puerto Rico become financially stable. Their primary purpose was to restructure the territory’s debt, a goal they have nearly reached, having reduced the total debt by $80 billion. However, Board members say that they also want to bring Puerto Rico’s accounting practices into line with modern accounting best practices in order to avoid future crises.
Complaints about the Board
One of the primary complaints about the Board is that it is undemocratic. The Board was appointed, not elected, and it has taken over some of the power of the territory’s elected officials. The very existence of the Board is often considered evidence of the colonial relationship of Puerto Rico and the United States.
Rep. Alexandria Ocasio-Cortez, in the aforementioned hearing, said. “One of the reasons that this restructuring is different from Detroit is that Puerto Rico is a colony of the United States and Detroit is not.”
The Board is also blamed for austerity measures implemented on the Island in order to cope with Puerto Rico’s crippling debt. “Instead of urging Congress and Wall Street to invest in Puerto Rico’s economy so that it can eventually pay its debts,” said an opinion piece in the Jacobin, a socialist political magazine based in New York, “and rather than pursuing an aggressive litigation strategy that would include, for example, a legal audit of the debt, the board has pursued a program of privatization, pension-cutting, utility hikes, university budget pruning, and public union busting.”
GrupoCNE, a nonpartisan think tank, wrote that the FOMB is “essentially a parallel government with a whole new set of wasteful expenses. Instead of employing local, in-house personnel as a way to build long-lasting technical expertise in Puerto Rico and nurture local talent, the FOMB has opted to spend on outside consultants, lobbyists and advisors, further eroding Puerto Rico’s ability to ever get rid of the financial control body and to successfully implement a long-term recovery program.”
These examples are typical of the arguments opposing the Board. At the same time, members of Congress in the recent hearing expressed concern that a quick end to the FOMB could allow “backroom deals” with creditors who bought up deeply discounted bonds with the intention of benefiting from them when Puerto Rico began to stabilize economically.
Puerto Rico’s balanced budget
Puerto Rico presented a balanced budget in 2024, but the FOMB reports that they had passed bills for additional spending before the budget could be certified. “[A] budget must not only be balanced at the beginning of the year; it must remain balanced at the end of the fiscal year. Otherwise, the Government will end up with a budget deficit, as happened for so many years before PROMESA was enacted,” they scolded.
The Board has largely taken credit for this year’s balanced budget. However, Governor Gonzalez-Colon championed legislation that is expected to increase revenue, and the residents of Puerto Rico must tolerate the austerity measures that make the reductions in expenditures possible.
