• The San Juan Daily Star

Governor: Dismissal of bankruptcy case would be ‘serious failure’ for fiscal board

Gov. Pedro Pierluisi

By The Star Staff

It would be terrible for Puerto Rico if the Financial Oversight and Management Board opts to request the dismissal of Puerto Rico’s bankruptcy case amid its opposition to the law that would enable the plan of adjustment (POA) for some $33 billion in debt, Gov. Pedro Pierluisi Urrutia said Wednesday.

The governor signed the POA enabling legislation, House Bill 1003, into law late Tuesday despite the oversight board’s opposition. The board said on Monday that it may withdraw the debt adjustment plan if it is unable to reach a consensus.

“It would be a serious failure for the financial oversight board if this bankruptcy case is dismissed. It would be a terrible failure,” Pierluisi said at a press conference.

“In the same way, trying to negotiate with a large number of creditors and then have everything turn for the worst, would also be another failure,” he added.

The governor hopes that the mediation process before Judge Barbara Houser continues and that the POA can be amended before it goes for confirmation hearings on Nov. 8. Some creditors have threatened to seek the case’s dismissal.

A House report on the bill enacted into law states that “by virtue of this Act, the Commonwealth of Puerto Rico supports the Plan and the public policy set forth in this Act, which, subject to PROMESA’s [the Puerto Rico Oversight, Management and Economic Stability Act] mandate to restore fiscal responsibility in Puerto Rico and the budgetary powers of the Board under PROMESA, includes zero cuts to the pensions of retired public employees, to the accumulated benefits of active employees and expresses the desire to promote the well-being of the people of Puerto Rico.”

Likewise, it indicates that “in total, the agreements included in the POA reduce the public debt of the Central Government by approximately 50 percent.”

“That is, the public debt would be reduced from approximately $70 billion to $34 billion, and the General Obligation (GO) and Public Buildings Authority bond debt would be reduced from $18.8 billion to $7.4 billion,” the report reads.

HB 1003 would allocate additional funds to the University of Puerto Rico, to be used for the improvement of the student experience and environment, so that the allocations for the entity are a total of $500 million annually for a period of five years from 2023 to 2027. Likewise, it would support the creation of a Trust Fund for University Scholarships.

Regarding municipalities, the approved document expresses support for the allocation of additional funds for municipalities and the continuity of essential services.

“The Government of Puerto Rico hereby declares that it is the public policy of the Commonwealth of Puerto Rico to guarantee to its population the efficient collection and disposal of garbage, solid waste, debris, as well as the implementation of recycling programs for attending to these residuals, so that to the extent that the Debt Adjustment Plan includes reductions in the amount of guaranteed debt, a portion of these savings that will be generated should be made accessible to the municipalities so that they can provide these services,” the document says.

In health-related matters, the bill establishes support for reasonable medical plans for central government employees that would benefit more than 60,000 Puerto Rican workers and their families. Likewise, it establishes the goal of increasing the population that has medical coverage. The purpose of this initiative is to extend and/or facilitate access to medical coverage to some 225,000 citizens who today lack medical plans.

Similarly, it favors the creation of the Special Fund for Social Inequality.

“This proposal, to be legislated soon, aims to combat poverty and social inequality,” reads the legislation, which also makes possible” the creation of the Strategic Investment Fund for Economic Development that injects continuous investment. This initiative proposes the creation of a Strategic Investment Fund divided into four categories.”

The bill would also establish a mechanism that allows the Puerto Rico government to advance the terms of payments and cancellation of debt after the oversight board ends under PROMESA.

“This mechanism has the sole purpose of authorizing the Government of Puerto Rico to refinance the debt payment agreements after the Board ends under PROMESA, with the sole objective of accelerating or settling the agreed payments, in accordance with the future fiscal situation. and without affecting the essential and priority services of the Government of Puerto Rico,” the legislation reads.

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