SAN JUAN, Puerto Rico (AP) -- Puerto Rico's government on Thursday urged legislators to move quickly and approve financial austerity measures following a report from a Wall Street ratings agency that downgraded the island's general obligation bonds to near-junk status.
Standard & Poor's noted that the U.S. territory's budget gap is significantly larger than originally estimated, and that current shortfalls will prevent the island from rebounding economically in the next two years.
The agency warned that if only limited progress is made in reducing the gap, it would further lower the rating.
S&P also downgraded the rating of the Government Development Bank of Puerto Rico on Thursday, saying it's not sufficiently independent from the state.
Jorge Suarez, secretary general of the Popular Democratic Party, which controls the island's legislature, said Thursday that the actual deficit is $2.1 billion, not $360 million as the previous administration estimated.
"We need to act now," he said.
The higher projected deficit is a result in part of expenses estimated at $140 million above budget and revenues of $910 million below budget, according to the S&P report. The administration of Gov. Alejandro Garcia Padilla released the new preliminary estimates in January, just months after he beat one-term governor Luis Fortuno of the New Progressive Party.
Javier Ferrer, president of the Government Development Bank of Puerto Rico, said legislators are considering several measures expected to boost revenue, but warned the government would still struggle economically. The government already has drawn a $775 million credit line with the bank to lower its deficit.
"In the past, the agencies were promised that the deficit would be eliminated at the end of this fiscal year," Ferrer said. "We've told them that this is very hard. We certainly aren't going to do that this year."
The governor already has submitted several measures aimed at cutting costs.
Earlier this month, Garcia issued an executive order barring agencies from paying public employees for their accrued sick pay. He also ordered the Management and Budget Office to cut all expenses by 30 percent, including professional services and purchases of equipment and materials.
"The S&P report is an alert ... to the gravity of the fiscal situation that our country faces," Garcia said, noting how the agency recognized that the government is considering several corrective measures. "However, these cannot remain simply proposals. They expect action."
Garcia's party controls the island's House and the Senate, but the measures have been criticized by Pedro Pierluisi, of the opposition New Progressive Party. As Puerto Rico's Resident Commissioner, Pierluisi is the territory's sole representative in the U.S. Congress.
Pierluisi said the S&P report demonstrates the agency has no confidence in the current administration.
"The government's fiscal challenges should be met with action, not talk," he said. "Garcia Padilla should have sought the necessary consensus from everyone."
Pierluisi's party also released a statement noting that under its 2008-2012 administration, agencies increased the bonds' ratings.
Treasury Secretary Melba Acosta urged officials to leave political bickering aside and focus on improving the economy of an island that is emerging from a six-year recession and has an unemployment rate higher than any U.S. state at 14 percent.
One of Puerto Rico's biggest fiscal problems is the $37.3 billion unfunded liability of its public pension system.
The unfunded liability, which is spread across three public pension systems, is almost four times the annual government budget for the island of nearly 4 million people.
Last month, the government presented a measure that calls for increased employee contributions, a higher retirement age and reduced benefits and monthly pensions for certain workers. Legislators are currently holding public hearings on the measure.
"It's clear that this needs to be approved...and soon," Acosta said. "That's the reality of it."