The Financial Oversight and Management Board for Puerto Rico announced that it certified the government of Puerto Rico’s updated Fiscal Plan for the Puerto Rico Sales Tax Financing Corporation (known as COFINA, in Spanish).
The 2020 Fiscal Plan for COFINA is “based on the macroeconomic projections outlined in the Certified Fiscal Plan for the Commonwealth of Puerto Rico and demonstrates that COFINA has sufficient revenue to cover operating expenses and debt payments,” the Board said in a press release.
“COFINA debt obligations are sustainable based on projected Sales and Use Tax (SUT) collection,” the U.S-appointed regulatory body said.
SUT collections in coming fiscals year are projected to rise 6.7%, from $2.4 billion in fiscal year 2020 to $2.5 billion in fiscal year 2021. SUT fell 9.7% in the current fiscal year because of the impact of the COVID-19 pandemic, from $2.8 billion in fiscal year 2019, the Oversight Board said.
COFINA had received SUT collections of about $437 million in November 2019, satisfying its obligations to bondholders and covering operating expenses, and the remaining SUT collections in fiscal year 2020 are revenues available to the government of Puerto Rico.
On July 1, 2020, COFINA will begin to pay the SUT collections to bondholders for fiscal year 2021, which amount to $454 million, the Oversight Board said.
In February 2019, the Oversight Board, the government of Puerto Rico and COFINA bondholders finalized the Plan of Adjustment for COFINA, reducing its $18 billion debt by $6 billion, and the annual debt service by nearly 50% reduction from the prior contractual debt service.