Bernier Calls For Voluntary Deals With Creditors as Hopes Dim on Congressional Action
SAN JUAN — The gubernatorial candidate for the Popular Democratic Party (PDP), David Bernier, said Wednesday that, as prospects of achieving a timely and favorable federal legislation on the Puerto Rico’s fiscal crisis continue to dim, the commonwealth urges a “voluntary postponement of principal payments” between the government and its creditors, paving the way for talks to continue toward a broader debt-restructuring deal.
“The best route at this time to restructure public debt and jumpstart our economy is to negotiate with creditors a voluntary postponement of principal payments. This would allow us to inject money to the General Fund and continue negotiations toward a comprehensive debt restructuring,” said Bernier, while adding that interest payments must nevertheless continue, due to many Puerto Rico pensioners depending on such payments.
“That has to be the route to avoid default,” the PDP governorship hopeful stressed.
Although the U.S. House Natural Resources Committee was expected to vote last week on a bill dubbed Puerto Rico Oversight, Management & Economic Stability Act, or PROMESA, plans were suddenly halted amid concerns over the lack of support for the bill to clear the committee.
The bill seeks to establish strong, independent fiscal oversight through a seven-member board. The board would also oversee the commonwealth’s debt-restructuring efforts, with the aim of having all sides reach a consensual agreement. If no consensus can be struck with creditors, the board could authorize taking the matter to federal court under a debt-restructuring mechanism exclusive to the territory. Moreover, PROMESA would also establish a temporary stay on creditor lawsuits against the commonwealth.
As the bill struggles to achieve enough bipartisan support to even reach a vote on the House floor, Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, said this week that PROMESA “is not satisfactory and it’s not going to work. And we’re not going to be able to pass it over here,” according to a Reuters report.
Meanwhile, the clock continues to tick on the commonwealth, as the first large debt-service payment, $422 million due May 2 on Government Development Bank (GDB) debt, quickly approaches. The Alejandro García Padilla administration has repeatedly warned it doesn’t have enough money to meet in full neither the bank’s payment, nor the more than $1.5 billion slated to hit on July 1, including $780 million in general obligation bonds (GOs).
“I’m glad to know there is progress in the negotiations on the GDB debt. I urge the parties to continue the dialogue until they can reach an agreement that would enable this restructuring,” Bernier noted, in reference to a tentative agreement between the bank and a group of its creditors that would provide the GDB some sort of relief before its May payment, as Caribbean Business reported Tuesday night.