A leftist candidate for Puerto Rico’s governorship has gained momentum and closed in on the front-runner, but analysts say his election would not have a dramatic impact on the future of the island’s bonds.
A poll released Monday by El Vocero, a leading Puerto Rico news outlet, showed the candidate, Jose Dalmau, polling 29% compared to 31% for
Dalmau is a candidate of the Country Alliance, an alliance created earlier this year between the Puerto Rico Independence Party and the Citizens’ Victory Movement.
The poll was conducted Oct. 1 to Oct. 16 and it has a margin of error of 2.94%.
In Puerto Rico’s elections, the candidate that receives the most votes on election day wins — there is no runoff between the top two candidates.
“Social democratic governments like Juan Dalmau’s Alliance are common throughout the world,” said Advantage Business Consulting President Vicente Feliciano. “Financial markets are familiar with these government administrations. Moreover, it was not a social democratic administration [that] brought about Puerto Rico’s government bankruptcy.
“Dalmau would operate within the framework of the Federal Oversight and Management Board,” Feliciano said. “His Alliance would be the minority in the legislature. In fact, Puerto Rico elected a social democratic pro-independence party in 1940. It’s still called the Popular Democratic Party and has certainly changed since then.”
Puerto Rico attorney and commentator John Mudd said for bondholders Dalmau’s victory would mean “absolutely nothing. The government of Puerto Rico is bound by the plans of adjustment in place and
“Given the history of polls in Puerto Rico, neither [the El Nuevo Día nor the El Vocero] poll generates credibility with me,” said José Garriga Picó, professor at University of Puerto Rico.
“If Juan Dalmau wins there will be little that he will be able to change except the political appointees,” Garriga Pico said. “He is going to administer the ‘Commonwealth’ he detests. His impact will be felt in the medium and long run, if he doesn’t develop a liking for the status quo.
“But in the medium run, he will project an image of anti-American nationalist that will hurt the credibility of the Commonwealth and its credit worthiness,” Garriga Pico said.
“Locally, his administration will always be precarious since he will have both legislative chambers dominated by the Popular Democratic Party and New Progressive Party,” Garriga Pico said. “And the Supreme Court will continue to have six associate judges appointed by the New Progressive Party and two appointed by the Popular Democratic Party.”
“In sum, a Dalmau term will be full of status, personal power and ideological struggles,” Garriga Pico said. ”Nothing will be accomplished legislatively and as a result, there will be no fiscal discipline.”
González Colón is Resident Commissioner of Puerto Rico in the U.S. House of Representatives. In this role she can sponsor legislation, participate in debates, and vote in committees. However, she cannot vote on legislation when it reaches the House floor. She is in the same party as current Gov. Pedro Pierluisi. She is leaving her role to seek the governorship.
Dalmau’s performance improved substantially from El Vocero’s July poll, when he polled 24% to González Colón’s 43%. Another Puerto Rico news outlet, El Nuevo Día, released a poll earlier this month showing Dalmau trailing González Colón by 12 percentage points but this poll was probably done earlier.
Puerto Rico’s election day is the same as in the 50 states, Nov. 5.
The federal government enacted the Puerto Rico Oversight, Management, and Economic Stability Act on June 30, 2016, the day before