D.C. forum to explore fiscal responsibility law for P.R.

Written by  //  March 1, 2016  //  Economy  //  No comments

Richard Ravitch

Richard Ravitch

WASHINGTON — Chile’s former finance minister and an ex-lieutenant governor of New York will be among five panelists appearing Wednesday in Washington, D.C., to discuss how a Fiscal Responsibility Law (FRL) might help stabilize Puerto Rico’s public finances and overhaul the island’s fiscal infrastructure.

The forum, organized by the San Juan-based Center for a New Economy (CNE), is to take place at the National Press Club.

“Puerto Rico’s drawn-out economic and fiscal crisis has prompted a series of debates on how to address a rapidly deteriorating socio-economic situation,” says a CNE briefing. “Among the options being discussed in the federal sphere is the establishment of a fiscal control board for Puerto Rico, similar to the one adopted in Washington, D.C., that would essentially command all aspects pertaining to government budgeting and spending. We strongly believe that this is not the only way forward.”

Instead, says the organization, a FRL — along with a locally driven effort to overhaul key institutions — “can transform Puerto Rico’s fiscal position and introduce much-needed governance reforms that ensure the Commonwealth’s long-term fiscal solvency and sustainability, while addressing legitimate federal concerns and recognizing valid political qualms on the island.”

Such FRLs have become popular since the 1990s and are common in countries throughout Europe, Asia and Latin America.

The most prominent of the five panelists to speak Wednesday is Andrés Velasco, who headed Chile’s Ministry of Finance from 2006 to 2010 — during the presidency of Michelle Bachelet — and later ran for president himself. He was part of the team that negotiated Chile’s trade deals with the United States, Mexico and Canada.

Velasco, a consultant for the IMF, the Inter-American Development Bank and the World Bank, taught development and international finance at Harvard and has published more than 100 articles and four books on economics. In 2009, Miami-based Latin Trade magazine named him “Most Innovative Leader of the Year” for his policies following the 2008 global financial crisis.

Also speaking will be lawyer and businessman Richard Ravitch, who in 1975 as New York’s lieutenant-governor helped New York City resolve its default crisis.

He recently served as an advisor in Detroit’s massive bankruptcy and last December testified before the Senate Judiciary Committee. In his testimony, Ravitch argued passionately for giving Puerto Rico the right to declare Chapter 9 bankruptcy protection — an option open only to U.S. cities, town, counties, tax districts, municipal utilities and school districts, but not states or territories.

Other panelists include Sergio M. Marxuach, CNE’s public policy director; Gordon Gray, director of fiscal policy at the Washington-based American Action Forum, and Tracy Gordon, senior fellow at the Urban-Brookings Tax Policy Center.

CNE Research Director Deepak Lamba-Nieves will moderate the panel following an introduction by the organization’s president, Miguel A. Soto-Class. Puerto Rico’s resident commissioner, Pedro Pierluisi, will also deliver brief remarks, as well Eduardo Bhatia, president of the Puerto Rico Senate.

The organization says the purpose of the event is “to discuss the advantages and disadvantages, as well as the benefits and shortcomings, of a FRL for Puerto Rico and how it may — or may not — fit within the broad framework of any federal policy that addresses the island’s current fiscal and economic crisis.”

CNE, founded in 1998, bills itself as “an independent, non-partisan think tank devoted to public policy research and analysis related to the economic development of Puerto Rico.” Since 2013, CNE has been recognized by the University of Pennsylvania’s Global Think Tank Report as one of the top think tanks to watch.

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