OVERSIGHT BOARD WELCOMES COURT DECISION TO UPHOLD AUTHORITY
Urges Government to implement reforms for economic recovery
(San Juan, PR – August 7, 2018)– The Financial Oversight and Management Board for Puerto Rico (the “Board”), created by Congress under the bipartisan Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA” or the “Act”), today welcomed a federal court decision to uphold its authority to approve and certify Fiscal Plans and Budgets for the Commonwealth and its instrumentalities. With this decision, the Board urges the Government to fully implement the certified Fiscal Plans and Budgets.
“The certified Fiscal Plans are Puerto Rico’s roadmap for a better future,” said José Carrión, Chairman of the Board. “There can be no doubt that the Fiscal Year 2019 Budget certified by the Oversight Board is the only one and must be enforced. We call on all stakeholders to get back to work in the interests of Puerto Rico, in order to end decades of mismanagement and rebuild our Island.”
“Our work now needs to be focused on implementing critical reforms, resolving the crushing debt crisis and transforming the Island’s economy,” Carrión added. “In the coming days and weeks, the Board expects the Government to deliver material progress on reforms to increase public sector efficiency and transparency, and make Puerto Rico’s economy more competitive and attractive for businesses and investors. At the same time, we will continue to pursue Plans of Adjustment with creditors to achieve debt restructurings and a return to the capital markets.”
The Oversight Board cited four areas in which it expects progress to be made: 1) Fiscal Plan Reform Implementation; 2) FY 2019 Budget Implementation; 3) Public Sector Financial Transparency; and 4) Debt Restructuring Plans of Adjustment with Creditors.
Fiscal Plan Reform Implementation: On June 29, the Board recertified the Fiscal Plans for the Commonwealth and certain instrumentalities, and a revision process is underway. Implementation of Commonwealth fiscal measures and structural reforms – such as right-sizing government, ease of doing business reforms, human capital investments, welfare-to-work policies, and the creation of an EITC program to increase labor force participation – has barely begun. PREPA’s new operational and management team must be resolute in achieving the meaningful energy sector transformation set forth in the PREPA Fiscal Plan to provide the people of Puerto Rico resilient and affordable energy. The Board urges the Government and public corporations to accelerate their work and make significant progress on implementation of the Fiscal Plans. The Board will monitor key developments and make adjustments to plans as necessary.
Fiscal Year 2019 Budget Implementation: On June 30, the Board approved revised budgets for FY 2019 for the Commonwealth of Puerto Rico and five covered territorial instrumentalities. These budgets are consistent with the objectives and targets comprised in the certified Fiscal Plans. The Board urges the Government and the Legislature to implement these approved budgets and work to achieve both revenue and expenditure targets, including the quarterly budget projections provision included in the Commonwealth Fiscal Plan, for making Puerto Rico’s public sector more efficient and effective.
Public Sector Financial Transparency: The New Fiscal Plan requires the Government to produce a number of public reports on Puerto Rico’s finances. Transparency is critical for strengthening public trust, giving civil society access to information, holding the public sector accountable, and achieving PROMESA’s objectives. While the Government has shown some progress in its monthly reporting package, it must follow through on all established public reporting deadlines in the Fiscal Plan.
Debt Restructuring Plans of Adjustment: The Board will continue to work towards debt restructurings that provide for the resolution of Puerto Rico’s debt crisis. It intends to reach consensual agreements where possible, through negotiations and the mediation process overseen by federal judges. The ultimate objective is to achieve approved Plans of Adjustment over the next 12 to 18 months.
The Oversight Board will continue to review the Court’s ruling and will issue further comments if necessary.
The Board also welcomes the Court’s separate decision granting its motion to dismiss the lawsuit brought by the Puerto Rico Legislature.
The full text of today’s Court decisions will be available on the Board’s website www.juntasupervision.pr.gov.