By The Star Staff
The Financial Oversight and Management Board has strengthened the regulations requiring municipalities to seek board approval of certain debt transactions.
On Oct. 25, the oversight board amended the policies to include, among other changes, certain requirements contained in the Municipal Code, and to clarify that the term “Debt Transaction” includes “any arrangement for repayment of inter-governmental, such as from municipalities; intra-governmental, such as from other Commonwealth government entities; or inter-agency past due obligations that extend beyond the current year, any advancement of funds and any other debt transaction or obligation evidenced by bonds, promissory notes or any other credit document.”
The oversight board established two policies, the Commonwealth’s Debt Transactions Review Policy and the Municipality Debt Transactions Review Policy, to require prior board approval of certain debt transactions by the Puerto Rico government, any of its covered instrumentalities, and municipalities to assure fiscal responsibility.
On Oct. 25, the oversight board amended the policies to broaden the kind of debt municipalities are prohibited from entering into without prior board approval.
The oversight board noted that it will only consider for approval municipal debt transaction requests submitted in compliance with the terms of the new policy.
No municipal debt transaction will be considered by the oversight board unless the municipality first obtains authorization for the transaction from the Puerto Rico Fiscal Agency and Financial Advisory Authority prior to seeking the board’s written approval.
In some cases, municipalities will also need the approval of the Office of Management and Budget.