Puerto Ricans have ample experience with hurricanes, but the storm approaching yesterday brought an added level of anxiety. The island’s dire financial straits have left essential public works, from power plants to retaining walls, weakened by years of scrimping on maintenance, the New York Times reported today. Puerto Rico sought bankruptcy protection in May, burdened with about $123 billion in bond debt and unfunded pension obligations. Its case is being handled in federal court under a special new law, called PROMESA, because the existing bankruptcy law excludes Puerto Rico. Under PROMESA, Puerto Rico’s finances must be supervised by a federal board until its house is back in order, a process that is expected to take years. Relations between the board and the elected government of Gov. Ricardo Rosselló were contentious even before Hurricane Irma, with the governor first agreeing to a five-year austerity plan, then reversing course and threatening to go to prison rather than accepting the entire package. In particular, the governor has refused to furlough government workers, and to reduce the pensions of retired government employees by an average 10 percent. The fiscal oversight board has sued the governor, asking the court to order him to carry out the entire austerity plan. The furloughs were supposed to have begun on Sept. 1. Despite the legal dispute, the board’s executive director, Natalie Jaresko, said in a statement Wednesday that the board was “working closely with Governor Rosselló to coordinate support for Puerto Rico in the aftermath of the storm.” Read more.
For updated news and analysis of Puerto Rico's debt crisis, along with current docket filings in Puerto Rico's case, be sure to visit ABI's "Puerto Rico in Distress" webpage.
