By John McPhaul
Financial Oversight and Management Board Chairman David Skeel on Tuesday praised the entry into force of the commonwealth debt adjustment plan (PAD by its Spanish acronym) and insisted that it will save the Puerto Rico government more than $50 billion in debt service payments.
“The entry into force represents a fundamental step to put an end to the financial crisis in Puerto Rico,” Skeel said in a written statement. “Today, the Government of Puerto Rico formally moves from fiscal instability and insolvency to a future of opportunity and growth, which makes today a truly historic day.”
“The Adjustment Plan paves the way for sustainable economic growth by eliminating the gloom of bankruptcy that all residents and businesses in Puerto Rico have felt, in one way or another. Executing the debt exchange and completing the cash payments puts an end to this painful chapter for the Government of Puerto Rico, although the debt of other institutions remains to be resolved, in particular that of the Puerto Rico Electric Power Authority (PREPA) and the Highway and Transportation Authority (ACT by its Spanish acronym),” he added.
“I want to thank all the Oversight Board and Government staff for the tremendous work they have done to achieve today’s victory,” said the executive director of the oversight board, Natalie Jaresko. “Completing more than 170 work tasks has allowed us to achieve a significant reduction of $33 billion in claims, create the Trust to deposit $1,5 billion to ensure that they finally receive pensions of $10 billion to preserve and protect pensions, millions in Defined Contribution accounts under Law 106-2017 for System 2000 participants and Law 1/447 retirees, and achieve eligibility for Social Security and the Defined Contribution Plan under Law 106-2017 for teachers and judges in order to receive benefits equivalent to other government employees.”
The island government completed the exchange of more than $33 billion in existing bonds and other claims for $7 billion in new bonds. Annual debt service will be reduced from a high of $3.9 billion before debt restructuring to a stable, affordable and predictable amount of $1.15 billion a year.