The federal appointees tapped to help map Puerto Rico's economic future are technocrats more than political actors, and that could make the U.S. territory's fiscal turnaround look more like a corporate restructuring than a politically charged municipal bankruptcy in the vein of Detroit, according to a Reuters analysis yesterday. The law known as PROMESA, which created the board when it passed the U.S. Congress in June with bipartisan support, envisioned a pragmatic solution for an island combating $70 billion in debt, 45 percent poverty and a brain drain as residents bolt in droves for the mainland United States. Its members, four Republicans and three Democrats appointed last week, were chosen by Republican and Democratic lawmakers and President Barack Obama. The board has broad powers to help stabilize the island's economy, from investigating Puerto Rico's government to working with that government on projects to spur economic growth. The island has 18 separate debt issuers, backed by different revenue streams, as well as $18 billion in so-called general obligation debt backed by the "full faith and credit" of the territory's government. Holders of all that debt will jockey for payouts against government vendors and beneficiaries of the island's public pensions, which have less than $2 billion in assets to cover some $45 billion in liabilities. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
