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Gov’t meets with credit rating agencies as 85% of public debt has been restructured

Writer's picture: The San Juan Daily StarThe San Juan Daily Star


Omar Marrero Díaz, Puerto Rico secretary of state and executive director of the Fiscal Agency and Financial Advisory Authority

By The Star Staff


Around 85% of Puerto Rico’s public debt has been restructured, ending about $65 billion in claims and achieving a total debt reduction of 63% as of Aug. 31 of this year, government officials said Wednesday.


Puerto Rico Secretary of State and Fiscal Agency & Financial Advisory Authority (AAFAF by its initials in Spanish) Executive Director Omar Marrero Díaz traveled this week to New York City along with other senior government officials to provide the most recent update on the island’s fiscal and economic outlook to the main rating agencies, namely S&P Global Ratings, Moody’s and Fitch Ratings.


In 2016, before the bankruptcy, Puerto Rico had about $72 billion in debt and more than $55 billion in unfunded pension liabilities.


“This has the dual purpose of continuing to pave the way for an eventual return to the bond market, as well as offering a clear picture of what has been achieved in the fiscal area and the steps that the incoming administration must take to continue the path of recovery,” Marrero Díaz said.


The other agency heads in the delegation included Treasury Secretary Nelson Pérez Méndez, Office of Management and Budget (OMB) Director Juan Carlos Blanco Urrutia and Central Office for Recovery, Reconstruction and Resilience (COR3) Executive Director Manuel Laboy Rivera.


The presentation that the delegation offered to the credit rating agency executives focused on several areas, starting with the island’s economic and fiscal performance during the past few years. Among the data offered under this heading, the unemployment rate stood out, which remained below 6.5% for 32 consecutive months, after decades of a rate that exceeded 10%.


“In addition, we emphasized key investments in Puerto Rico by multinational companies such as Sartorius ($33 million), Baxter ($30 million) and CooperVision ($500 million), to name just a few,” Marrero Díaz stressed.


Regarding the U.S. territory’s fiscal picture, the highlights were the General Fund revenues, whose compound annual growth rate increased by 10% over the past five years. Meanwhile, the results associated with the Earned Income Tax Credit (EITC) program also exceeded expectations.


Updated data was also offered on the funds Puerto Rico receives through the Federal Emergency Management Agency (FEMA), of which some $23.2 billion has been disbursed out of a total of $50.5 billion obligated.


In the area of energy infrastructure, there are currently 191 projects for permanent improvements to the electrical grid, representing some $6.1 billion provided by FEMA. That represents around 60% of the total funds (some $10.5 billion) obligated to the Puerto Rico Electric Power Authority for those purposes.


The delegation also provided an update on the latest developments in transactions related to public-private partnerships, a sector Puerto Rico has led in recent years, as well as new transparency and sound fiscal management practices in the government.


“Last but not least, we offered details on the process of restructuring Puerto Rico’s debt, which is already in its final stages except for the Electric Power Authority, which is still in mediation before the Title III Court,” Marrero Díaz said.

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