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Home > About GDB > History

History

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The Nineties: A Focus on Infrastructure

Puerto Rico launched a massive public works program during the 1990's, with the GDB playing a central role in its financing. In 1991, the government invested $1.9 billion for the construction and rehabilitation of the island’s highways and to begin major improvements in the Luis Muñoz Marín International Airport. Throughout the decade, the Bank also provided financing for such projects as the Urban Train, the Superaqueduct, the Puerto Rico Coliseum and the Puerto Rico Art Museum. The tourism industry also received the Bank’s attention through the establishment of the Tourism Development Fund. Thanks in part to the Bank’s efforts, a number of renowned international hotel chains established operations on the island.

In 1993, the Puerto Rican government began to privatize many government-owned facilities, with the GDB playing a central role in the process. Among the government-owned entities sold to private interests were the Puerto Rico Telephone Co., the Navieras shipping line, the Sugar Corporation, the Land Authority’s pineapple processing plant and prison facilities. In addition, the implementation of the Health Reform Program led to the sale of many of the government’s health facilities to private owners.

Meanwhile, the Bank in 1990 asked for the first time that its bond issues be given a credit rating. Standard & Poor’s and Thomson Bankwatch granted the Bank’s issues an excellent rating, a distinction shared with just nine other institutions in the financial universe.

The 1990's also witnessed the demise of Section 936. In 1996, Congress enacted legislation calling for a 10-year phase-out of the Section 936 tax benefits. Thousands of manufacturing jobs were lost as plants started shutting down in the wake of the elimination of Section 936.

Some U.S. manufacturers operating in Puerto Rico adjusted to the loss of Section 936 by converting their operations to Controlled Foreign Corporations (CFC), which allowed them to postpone payment of federal taxes through the transfer of profits to overseas operations.

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