Gov says Puerto Rico must seek a balance to ‘get out of debt’
Assures plan of adjustment can be voted on
SAN JUAN — Puerto Rico Gov. Wanda Vázquez said Tuesday that she “respects” the plan of adjustment submitted by the Financial Oversight and Management Board of Puerto Rico for Judge Laura Taylor Swain’s consideration.
“We need to have a balance because Puerto Rico has to get out of the debt,” Vázquez said during a press conference held at a Carolina studio where the filming of a new TV show on the island was announced.
Regarding the agreement to cut the pensions of about 40% of the island’s retirees by 8.5 percent, the governor said public workers can vote against it.
“This plan could be amended as part of the process,” Vázquez assured. “What I am trying to say is that pensioners have a right to vote on the plan and it’s subject to any change of opinion.”
On Friday, the fiscal board announced that after negotiations with creditors, the proposed plan of adjustment it filed in court reduces the commonwealth’s $35 billion in liabilities—bonds and other claims—by more than 60 percent, to $12 billion.
The plan of adjustment “delivers meaningful reductions from bondholders, providing, on average, a more than 60% blended reduction in total Commonwealth liabilities. The Plan strengthens pensions by establishing an independent pension reserve trust to ensure PayGo benefits can be paid regardless of the economic or political situation. It includes an 8.5% pension reduction for retirees earning over $1,200 per month, so 60 percent of retirees would not face any cut,” the board explained.
Agreements were reached with the Official Committee of Retired Employees of the Government of Puerto Rico (COR by its Spanish acronym), the Lawful Constitutional Debt Coalition (LCDC) and QTCB Noteholder Group (QTCB) representing certain general obligation bondholders, and the Public Servants United of Puerto Rico (SPU)/AFSCME Council 95, who “have come together understanding the financial situation on the island and support the Plan as a compromise to achieve stability for Puerto Rico,” the board said.
In a statement issued Friday, COR said that the presentation of the Plan of Adjustment is “an important step” for Puerto Rico government retirees, noting that it “provides certainty to the payment of pensions and benefits for retirees now and for years to come.”
—Cybernews contributed to this report