Oversight board greenlights $300 million loan for PREPA pensions
By The Star Staff
The Financial Oversight and Management Board has approved a resolution for the commonwealth government to grant a $300 million loan to the Puerto Rico Electric Power Authority (PREPA) to make pension payments.
According to a Nov. 10 letter, the $300 million comes from excess funds from the General Fund for fiscal year (FY) 2023, which ended in June of this year.
The oversight board wrote that it was presenting a resolution to revise the commonwealth’s certified budget for FY 2024 to include an appropriation from FY 2023 excess funds in the General Fund of the commonwealth treasury for a loan to PREPA.
On Nov. 9, the oversight board determined that the governor’s proposed resolution is a compliant resolution, and approved the resolution accordingly.
The compliant resolution provides $300 million needed to fund PREPA contingent liabilities, to be loaned to PREPA subject to agreed upon terms with the oversight board, using appropriations under the custody of the island Treasury Department.
“Such new appropriation will be funded, and such funds loaned to PREPA, from FY23 excess cash held by the State Treasury,” the oversight board stated. “Any such funds loaned to PREPA shall be used solely for (a) payments by PREPA to PREPA Employees Retirement System (PREPA ERS) for the purpose of paying pensions and related obligations to participants in PREPA ERS, or (b) repayment of such funds to the general fund of the Treasury to the extent not used for payments to PREPA ERS.”
Proceeds of the loan must be held by PREPA in trust for the commonwealth until paid to PREPA ERS.
The oversight board expects to certify the resolution, which provides for the joint development of budgets.
“If the legislature fails to submit a compliant resolution, adopted by the legislature by November 14, the [oversight board] shall submit a resolution to the governor and the legislature, and such resolution shall be deemed to be approved by the governor and the legislature,” the board said. “Please be advised that any changes to the budget, other than those set forth above, will not be deemed compliant with the certified 2023 commonwealth fiscal plan.”