The governor, Luis Fortuno, of the pro-statehood Partido Nuevo Progresista (PNP), will face increasing public dissatisfaction as he implements austerity measures to reduce the government’s fiscal deficit amid a three-year recession. As his popularity falls, owing to public-sector layoffs and rising unemployment, he will try to promote economic recovery through an austerity-plus-stimulus fiscal balancing plan. Under this unusual policy mix, the administration will attempt to jump-start the economy by spending US economic stimulus money totalling US$6bn (9.5% of GNP). However, US funds are flowing at a slow pace and a sizeable portion of them is earmarked for transfers to individuals and other uses that are not certain to have a strong impact on domestic demand. Moreover, the US administration is proposing changes to tax legislation that could have major negative effects on US manufacturing companies operating in Puerto Rico. Under these circumstances, the Economist Intelligence Unit expects Puerto Rico to remain firmly in recession during the outlook period, with economic activity contracting by 3% in fiscal year 2009/10 (July-June) and 3.5% in 2010/11. The political status issue will remain important and a proposed referendum, albeit not guaranteed, remains a possibility in 2010-11.