Saying she “did the best she could with the tough hand that was dealt” and ending 12 years of public service, Puerto Rico Government Development Bank President Melba Acosta is stepping down from her post, effective July 31.
Acosta — who during her tenure in government since 2004 has headed the Office of Management and Budget, the Treasury Department and the GDB — has been part of the current administration’s fiscal team, steering the strategy to address the Commonwealth’s unprecedented economic crisis and the repayment of its $69 billion public debt.
“These have certainly been three-and-a-half very tough years. Of all of the difficult terms we’ve lived, this has been the toughest with regards to government finances. We’ve had to go through things no other administration has had to face,” she said during a sit-down with members of Puerto Rico’s press corps Thursday.
Acosta, who is returning to the private sector, said she had been looking for the right time to step down, denying her resignation was related to an investigation the Securities and Exchange Commission launched in December 2014 related to the government’s last two bond emissions before it lost access to the markets.
“If that had been the case, I would have resigned in December 2014. This has nothing to do with that,” she said. “I leave satisfied with the job done. We still have a way to go, but we did what we could within our reality to steer Puerto Rico down the right path.”
Acosta said she had been “waiting for the right moment” to turn in her resignation to Gov. Alejandro García-Padilla, deciding the time to do it was after last week’s series of events: the government’s unprecedented $900 million default on General Obligation debt, the release of the 2014 audited financial statements and finalizing the budget for Fiscal 2017. She also said the approval of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) also contributed to her departure.
“It provides a sense of calm to know that Puerto Rico was given the tools to restructure its debt. The oversight board [created by PROMESA] isn’t the one we would have liked, but we have a mechanism that helps us restructure all of the debt, including GOs and Sales Tax Financing Corp. [COFINA] bonds and a stay on litigation,” she said. “There are doubts about how the board will function and its interaction with the government, but that will be worked out.”
A future for the GDB
The official is departing as the agency she leads is undergoing a transformation that will strip it of many of the responsibilities it has had since its establishment as the government’s fiscal agent. The GDB’s future operations will depend on whether it can focus on municipal financing, assisting town government to access funds that the private banking sector is not providing, she said.
“This was a very important entity that initially promoted many economic development projects related to roads, hotels and others. If it is focused and leaves behind the bad practices of granting loans to cover deficit financing like it has done, it could again be a custodian bank,” she said.
While Acosta has had talks with the governor on her potential successor, she refrained from disclosing who the potential candidates could be.
Critics weigh-in on Acosta’s departure
Acosta’s announcement prompted swift response from opposing party lawmakers, including New Progressive Party Minority Speaker Jenniffer González, who described her legacy as one of “fiscal irresponsibility, improvisation on economic issues and tax policy.”
She also insisted Acosta will not be immune to the SEC’s probe into the $3.5 billion bond issue in 2014.
“She went on to bankrupt and liquidate the GDB. Her nefarious management has put the island’s economic stability in a precarious state and thanks to this federal investigation, she has had to resign,” González said.
Meanwhile, NPP Rep. José “Quiquito” Meléndez said her resignation marks the start of a string of departures in the government in coming months after “its collapse and acknowledgement of its failure to manage Puerto Rico.”
“During difficult times is when the good ones really prove themselves. Today, the GDB president jumped ship. The wave of resignations has begun following the announced arrival of the oversight board,” he said.