Op-Ed: Puerto Rico’s time is NOW!
With the recent approval of the Plan of Adjustment to restructure its government debt and the Fiscal Plan that will govern its fiscal management starting July 1, 2022, Puerto Rico closes the chapter on bankruptcy and ushers in a new era of fiscal stability, economic growth, and sustainable opportunity.
The Plan of Adjustment marks a historic step for the Commonwealth to conclude the largest restructuring of municipal debt in U.S. history. It slashes claims against the Government by 80 percent and ensures Puerto Rico has an affordable, predictable, and sustainable level of debt service moving forward. It also sets sound debt management policies by defining rules under which the government can borrow in the future, how much it can borrow, and for what purposes.
The Plan of Adjustment also protects government retirees from any reduction in their monthly benefits, provides a path for Puerto Rico to regain access to capital markets and ensures cash reserves for day-to-day and emergency expenses.
In total, the government has succeeded in restructuring approximately $70 billion in claims to $34 billion in new debt, including consummated restructurings and those to be finalized in the coming months.
In the meantime, the Government of Puerto Rico has been making significant progress in fiscal management, including reducing headcount by approximately 26,000, or 16%, and reducing spending by approximately 15%, both since FY16.
In addition, the Certified Fiscal Plan 2022 includes an agenda to institutionalize financial management best practices and reflects a significantly improved financial position driven by an improved macroeconomic outlook and increased federal Medicaid funding.
Furthermore, the government is accelerating disbursement of the $80 billion in federal funds earmarked for Puerto Rico’s recovery and reconstruction in the wake of hurricanes, earthquakes, and the COVID-19 pandemic.
In short, Puerto Rico is now poised for economic growth. The end of bankruptcy is at hand, lifting the cloud of uncertainty that stifled progress in recent years. Financial management best practices are being implemented to maintain fiscal stability, including balanced budgets. Unprecedented support from the federal government — with already allocated funds to be invested in Puerto Rico’s infrastructure and its people — is being put to work.
Sustainable growth in the medium term still requires improving competitiveness through structural reforms such as human capital and welfare, K-12 education, ease of doing business, energy, and infrastructure, but the Government is keenly focused on their successful implementation.
We are eager to share with the market and the public every detail of this remarkable story of resilience, recovery, turnaround, and growth. To that end, we are planning a unique event, the PRNOW Summit 2022, to be held June 6-7, 2022, at the Puerto Rico Convention Center in San Juan.
An A-list roster of financial experts, government officials and inside-track speakers will brief participants on everything they need to know about the largest municipal debt restructuring in U.S. history and the opportunities it brings for everyone.
Don’t miss this unique opportunity to learn why the time for Puerto Rico is NOW.