Fiscal board holds hearing on Puerto Rico’s liquidity
SAN JUAN – The Financial Oversight & Management Board for Puerto Rico held an “investigative” hearing on the liquidity of Puerto Rico, its instrumentalities and entities Friday at the Convention Center in San Juan.
The fiscal board had previously announced it would conduct an investigation into what it “understands is over $6 billion held in deposit” in recently published government bank accounts” and confirmed Friday “it expects to appoint an independent forensic analysis team shortly to compile a comprehensive inventory of all government bank accounts, cash equivalents, and investments along with their respective account balances.”
“While much has been learned about the Government’s cash management practices, more information is needed to understand the sources, uses and legal restrictions on funds, address information gaps and strengthen public sector financial reporting, systems and accountability,” Natalie Jaresko, the board’s executive director, said in written statement after the hearing.
“It is essential that we continue to work to improve the transparency and accountability of Puerto Rico’s public finances to put the Commonwealth on the road to economic recovery, regain access to the capital markets and restructure our immense debt,” Chairman José Carrión said in a release Wednesday. “For too long, the Commonwealth has sacrificed fundamental best practices in financial reporting. Without timely annual Commonwealth consolidated financial reporting, full transparency of the country’s financial situation has been impossible to achieve without inordinate amounts of time, effort and resources.”
He added that, “to date, the Board’s oversight has resulted in improved liquidity transparency for the TSA [Treasury Single Account].”
Carrión further continued: “The Board, since its inception, has made clear to the Government its requirement that significant gaps in available data be addressed,” and that it “firmly believes that requiring reformed financial reporting will provide a better framework for reliable fiscal and economic decision-making.”
The board heard testimony Friday from nine current and former government officials, including the Puerto Rico Fiscal Agency and Financial Advisory Authority (Fafaa) and the Treasury Department.
The first panel of witnesses was composed of Gerardo Portela, executive director of the Fiscal Agency & Financial Advisory Authority (Fafaa); Pedro Soto, Fafaa chief financial officer; Treasury Secretary Raúl Maldonado; José I. Marrero, executive director of the Office of Management & Budget (OMB); Assistant Treasury Secretary (Cash Management) Francisco Peña; and University of Puerto Rico Comptroller Antonio Tejera.
The second panel comprised former Treasury Secretary, OMB Director & GDB President Melba Acosta; former OMB Executive Director Luis Cruz; former OMB Executive Director Carlos Rivas; and former Treasury Secretary Juan Zaragoza.