COFINA’s debt service fund grew to $245.8 million
Puerto Rico has released its audited financial statements for fiscal year 2023, the first full audit reflecting the Commonwealth’s finances after formally completing its historic debt restructuring in 2022.
The document, filed July 14, 2026 with the Municipal Securities Rulemaking Board, offers a clearer view of the government’s post‑bankruptcy footing: a slimmer overall deficit, stronger revenue performance, and improved liquidity, alongside continued fiscal distress in several major public entities.
The audit reports a net deficit of $42.8 billion for the primary government, an improvement of roughly $8.3 billion from the prior year. Governmental activities drove most of the progress, with their deficit shrinking by $7.7 billion. The change stems largely from a steep reduction in general government expenses — from $7.3 billion in FY2022 to $3.3 billion in FY2023 — following adjustments to pension actuarial assumptions under the Commonwealth’s Plan of Adjustment. Federal grant revenue also rose by about $1.7 billion, and spending controls under Act 66‑2014 continued to restrain payroll growth, subsidies, and formula‑based appropriations. Total governmental revenues reached $31.4 billion, outpacing expenses of $23.7 billion.
The General Fund ended FY2023 with a $9.2 billion balance, up $1.5 billion from the previous year. On a budgetary basis, the General Fund posted a modest $40.1 million deficit, but under GAAP accounting, revenues exceeded expenditures by $2.6 billion. The difference reflects timing and accounting treatments for federal reimbursements, debt proceeds, and nonbudgeted funds. Actual General Fund revenue reached $12.8 billion, surpassing the original budget by 16 percent.
KPMG issued unmodified opinions for most major funds and activities, including the General Fund, Sales Tax Financing Corporation (COFINA) funds, and governmental activities. However, the auditors issued qualified opinions for business‑type activities and the Unemployment Insurance Fund, citing incomplete or inaccurate information related to CARES Act overpayments that prevented them from determining whether adjustments were necessary.
Despite improvements at the central government level, the audit raises serious going‑concern warnings for several public entities. PREPA continues to face a $10.1 billion accumulated deficit, ongoing Title III bankruptcy proceedings, defaulted debt, and insufficient liquidity. The University of Puerto Rico reported a $1.3 billion deficit and remains heavily dependent on Commonwealth appropriations while operating under a standstill agreement on its revenue bonds. The Puerto Rico Medical Services Administration continues to post recurring losses and relies on government subsidies to remain operational. The Government Development Bank, still winding down after its Title VI restructuring, also remains in a precarious financial position.
As of June 30, 2023, the primary government reported $31.1 billion in outstanding bonds and notes, while discretely presented component units held an additional $16.6 billion in debt. Capital assets across the primary government were valued at $7.9 billion net of depreciation.
The audit also highlights several external risks that could affect Puerto Rico’s fiscal trajectory, including potential federal funding cuts under the Trump administration, delayed FEMA reimbursements — including a $105.5 million cost‑share obligation for Hurricane Fiona — and severe weather events in 2024 and 2025 that caused tens of millions of dollars in infrastructure damage. The prolonged federal government shutdown in late 2025 further disrupted grant processing and slowed reimbursements.
Restructured entities such as COFINA showed signs of stabilization. COFINA’s debt service fund grew to $245.8 million, while its special revenue fund saw a slight decrease. Other entities operating under Title III and Title VI restructurings, including PRIFA, PBA, and PRCCDA, continued functioning within their respective agreements.
