A U.S. judge ruled yesterday that bankrupt Puerto Rico cannot fund more than $300 million in annual pension and health costs for its municipalities, but suspended the effective date of the order for three weeks due to the ongoing coronavirus health crisis, Reuters reported. Puerto Rico’s federally created financial oversight board sued the U.S. commonwealth’s governor and fiscal agency in July, contending a new law authorizing the funding does not comply with its fiscal plan and violates the 2016 federal PROMESA Act, which established the board and a restructuring process for Puerto Rico’s $120 billion of debt and pension obligations. Judge Laura Taylor Swain, who is hearing Puerto Rico’s bankruptcy, voided Law 29, a measure enacted last May to aid the Caribbean island’s cash-strapped municipalities by eliminating their obligation to pay for employee health and pension costs. The order, however, will not take effect until May 6 due to “the additional challenges facing the parties during the COVID-19 public health crisis,” according to Judge Swain’s ruling.
