OBoard rejects gov’t fiscal plan, requests changes by Feb. 12
The Financial Oversight and Management Board for Puerto has asked the Puerto Rico government to revise the proposed fiscal plans for the Commonwealth, the Puerto Rico Electric Power Authority and the Puerto Rico Aqueduct and Sewer Authority, as per letters sent Monday.
The Board is requiring changes and further clarifications to proposed structural reforms, fiscal measures, and baseline projections be made by Feb. 12.
The Board noted that the Commonwealth’s proposed Fiscal Plan includes many important proposals needed to move Puerto Rico to fiscal sustainability and economic growth.
However, the letter outlines certain material elements and improvements that are required by the Board. For example, the Board requires changes and further details to the structural reforms in the areas of ease of doing business, labor market and labor reform, tax reform, infrastructure reform and capital investment, human capital, and power sector reform.
“It is imperative that Puerto Rico seize this moment to fundamentally reform an economy that has been in a long-term recession, even before Hurricanes Irma and María,” Jose Carrión, Chairman of the Board wrote.
“Our goals of achieving balance and renewing access to the debt markets is only possible if we fundamentally change the underlying economic trends that characterized Puerto Rico’s economy prior to the hurricane,” he said.
As previously mentioned, the Board also welcomed the governor’s announcement regarding the PREPA transformation. The Board is calling for a five-year plan focused on reducing costs, improving reliability, and ensuring resiliency. The proposed Fiscal Plan should outline the path, timeline, and parameters of the transaction.
“PROMESA provides the government with a powerful tool to restore economic growth and opportunity to the people of Puerto Rico,” Carrión wrote. “The Board urges the government to use this tool to provide for a sustainable fiscal future for PREPA and the Island’s energy sector and to create the conditions that provide for more affordable electricity, more reliable electricity, cleaner electricity, and a more resilient power infrastructure.”
Christian Sobrino, the governor’s representative on the Board, responded to the Oversight Board’s requests, saying “The process for drafting and certifying fiscal plans contemplated under PROMESA is an interactive one. Therefore, we will carefully review the comments of the [Oversight Board], as well as meet any additional request for information, included in the letters.”