Gov. Vázquez signs measure that restricts future debt issuance

SAN JUAN – Gov. Wanda Vázquez Garced signed Senate Bill 1447, a measure that establishes the Debt Issuance Liability Act, imposing restrictions on the issuance of future debt.

On Wednesday, the Bond Buyer reported that Vázquez said the new law went beyond the plan of adjustment, which includes restrictions on debt issuance, because the restrictions extend to Puerto Rico public corporations and authorities.

“Portions of the plan devoted to bonds are currently under renegotiation. However, the restrictions are likely to continue in any new plan,” the specialized news outlet wrote.

The bill imposes restrictions on the issuance of future debt, such as only allowing long-term debt to be issued for capital improvements, not issuing debt that matures after 30 years and that repayment of the principal begin within two years of issuance.

“This measure responds to the need that we had before us for the Government of Puerto Rico to once again have credibility and transparency, and establish uniform and responsible processes for the issuance of any future debt,” said Vázquez.

Vázquez sent the measure to the Legislative Assembly “given the Adjustment Plan presented by the Fiscal Oversight Board (JSF). Because the House of Representatives had not approved it during the ordinary session, the governor included the measure in the extraordinary session that ended a few days ago and was finally approved,” according to a press release issued by the governor’s office.

“The restructuring of the debt is an essential step to restore economic growth in Puerto Rico and get out of the fiscal crisis once and for all. We have adopted a responsible and strong public policy that will govern any debt issuance that is made in the future, with stricter parameters than those contemplated by the Plan, insofar as they establish limitations not only on the debt that is payable from the central government revenues, but to the debt of most public corporations and instrumentalities,” the governor said.

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