Puerto Rico’s governor yesterday withdrew his labor reform proposal after the island’s oversight board demanded additional measures, deepening a divide in the parties’ efforts to reach a consensual turnaround plan for the bankrupt, storm-ravaged island, Reuters reported. Governor Ricardo Rosselló said demands made by the federally appointed board earlier yesterday would have made his labor reform plan “impossible.” “The board pretends to dictate the public policy of the government, and that, aside from being illegal, is unacceptable,” Rosselló said in a statement on Wednesday evening. Puerto Rico is navigating both the biggest bankruptcy in U.S. government history, with $120 billion in combined bond and pension debt, and its worst natural disaster in 90 years caused by September’s Hurricane Maria. Puerto Rico’s federally appointed financial oversight board on Wednesday insisted on pension cuts and other austerity measures as conditions for approving a turnaround plan for the bankrupt island still reeling after Hurricane Maria. In a seven-page letter to Governor Rosselló, the board called for a revised plan with an average of 10 percent cuts to public employee pensions, provided that no one is pushed into poverty by the cuts. The demand is part of a bankruptcy process under which Puerto Rico must submit a blueprint for regaining its financial footing. The plan must be approved by the oversight board, which may impose its own plan if both sides cannot agree. Read more.
In related news, Puerto Rico’s Government Development Bank, the island’s insolvent former fiscal agent now in wind-down mode, has tweaked its $5 billion debt restructuring deal to help keep small towns afloat six months after Hurricane Maria, Reuters reported. Governor Ricardo Rosselló’s office said in a statement on Tuesday that the bank, known as the GDB, will allow towns to offset any loans owed to it with assets on deposit at the bank. The towns also will be allowed immediate payment of 55 percent of certain assets held at the GDB. Those concessions are offset by other changes that keep the new structure roughly neutral for creditors, who will receive the same 55 percent repayments they would under the original deal, struck in May. “The amendment to the RSA (Restructuring Support Agreement)is a significant step forward toward the GDB debt restructuring and the ultimate resolution of GDB,” Rosselló said. Like the old agreement, the deal splits the GDB into two entities — the first to issue new debt to repay municipal depositors and bondholders, and the second to serve as a public trust for the benefit of other depositors, according to the statement from Rosselló’s office. Read more.
The people of Puerto Rico need your help. Thousands are still without regular power service, and many more need to rebuild their homes. Please join the ABI Endowment and the Mariano Rivera foundation for a charity benefit for Puerto Rico on April 4, 2018, at the New York Athletic Club.
