• The Star Staff

Governor signs bill that restricts future debt issuance

By The Star Staff

Gov. Wanda Vázquez Garced has signed the Debt Issuance Responsibility Law, which imposes controls on future debt issuances by Puerto Rico and its public corporations, according to a La Fortaleza press release Wednesday.

“This measure responds to the need we had before us for the Government of Puerto Rico to once again have credibility and transparency, and establishes uniform and responsible processes for the issuance of any future debt,” Vázquez said in a written communication.

The new law comes as there are still five government entities -- the commonwealth, the Puerto Rico Electric Power Authority, the Employees Retirement System, the Public Buildings Authority and the Highway and Transportation Authority -- in bankruptcy under the Puerto Rico Oversight, Management and Economic Stability Act. A sixth, the Puerto Rico Sales Tax Financing Corp., exited bankruptcy in February 2019.

The measure establishes uniform processes for issuing any debt in the future. It imposes restrictions on the issuance of future debt, such as only allowing long-term debt issuance for capital improvements, prohibiting debt issuances maturing in more than 30 years and establishing that repayment on all debt must begin within two years of its issuance date, according to the release.

It was in December that Vázquez first announced legislation that would put stringent controls looking forward on how the commonwealth executes bond issues and would redefine the types of debt that will be calculated within constitutional debt limits.

The measure was not approved in the regular legislative session, but was included in the recent special session.