GDB warned it could lose federal funds

SAN JUAN – The Government Development Bank (GDB) only has some $190 million in cash left, and amid its precarious state has already received a letter from the Environmental Protection Agency (EPA) warning that the flow of federal funds is in jeopardy for not having guaranteed the federal funds that should be deposited in the institution.

During government transition hearings Monday at the State Department, GDB President Alberto Bacó Bagué acknowledged that one of the great challenges of the next administration will be to meet the required federal fund deposits in the GDB.

“We must find ways to comply with these federal deposits, but we must be careful not to discriminate and not comply with deposits from cooperatives or the Science and Technology Trust. You have to find a way to inject liquidity into the GDB. It is a challenge that is tied to a series of decisions the next administration has to make,” Bacó Bagué said.

The GDB president said the bank has $175 million in cash, which will increase to $190 million Friday after a Sales Tax Financing Corp. (Cofina by its Spanish acronym) deposit.

Economic Development Secretary and GDB President & Chairman makes his case for keeping and reviving the government bank during an interview with Caribbean Business. (CB Photo/ Jaime Rivera)

“There are candidates in elective positions here who have commented that the bank [GDB] should disappear. Getting rid of the GDB entails not complying with federal funds and entails non-compliance with cooperatives. This is not matter of getting rid of it and starting from scratch. David Bernier said it one time [liquidating the GDB] and then didn’t mention it again when it was explained. I believe that those who say the bank should disappear are wrong,” Bacó Bagué said.

He added that the bank’s precariousness is due to the government of Puerto Rico having stopped paying the institution the money owed.

“They have criminalized the bank because it is the easiest thing [to do]. What I am trying to tell people is the bank is savable and has a reason to exist. The easiest thing is to say we have to liquidate it, but I’m trying to warn that that’s going to result being twice [as bad] because we have to create a new infrastructure. The problem with the bank is the government stopped paying it, not that the bank has done anything bad,” Bacó Bagué insisted.

Regarding his predecessor, Melba Acosta, the new GDB president said she earned a $180,000 salary and was paid $86,000 when she left for an accumulated 60 days of vacations and 64 sick days.

“The only person receiving a salary of more than $150,000 at the GDB was Melba Acosta,” he said.

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