CNE Review: The Oversight Board has Failed in Many Objectives
Think Tank Examines PROMESA since its Enactment in June 2016
The Center for a New Economy (CNE) says the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), which established a board and an office to oversee the commonwealth’s finances, has not achieved most of its objectives.
According to CNE’s analysis, since the enactment of PROMESA in 2016, Puerto Rico has benefited from the suspension of litigation demanding repayment and a moratorium on debt payment and has attained “certain control, transparency, and visibility in government spending.”
However, five years later, CNE says that approximately two-thirds of the bond debt has not been restructured; critical projects for economic development have not been approved; the audited financial statements are over three years past due; the move to budgeting on a modified accrual (or accrual) accounting basis is a work in progress; and the government’s budget is not yet balanced, as it cannot yet include debt service.
In addition, CNE says the FOMB’s insistence on implementing spending cuts, instead of eliminating tax exemptions and increases in collections, has generated “anxiety and uncertainty among the population and may have permanently damaged important institutions for the economic development of Puerto Rico such as the University of Puerto Rico.”
“Thus, as we stated in 2016, the economic, political, and social costs associated with the colonial PROMESA experiment have been extremely high and explicit, while any benefits we may have derived from it have been small and most remain quite uncertain and contingent,” concludes the analysis.
CNE agrees with Appellate Court Judge Torruella who expressed that PROMESA has been “Congress’s fourth try at cutting through the Puerto Rican Gordian knot in its interminable attempt to colonially rule Puerto Rico and its people.”