Governor hopes Oversight Board declares debt unpayable

CATAÑO — Gov. Alejandro García Padilla said Wednesday he has been in communication with the fiscal board created by the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) while the entity evaluates the draft fiscal plan he and his economic team presented more than two weeks ago.

Regarding the process, he said it could be slow due to how “voluminous and technical” the document is, whose numbers “require a lot of analysis.” However, he indicated he hopes that after the Financial Oversight & Management Board conducts its analysis, it will conclude Puerto Rico’s debt, estimated at $70 billion, is unpayable and thus requires restructuring.

“The board is in the [analysis] process. The board hasn’t said the debt must be paid. It is in the process of delving into the numbers. The [U.S.] Treasury concluded the entire debt must be restructured, Congress already concluded the entire debt must be restructured. Now the board must be convinced by the numbers. That process is dense, it is complex, it isn’t analyzed in two hours on a radio show; it is analyzed in many, many hours and with many technicians, and the same conclusion will always be arrived at,” the governor said.

The fiscal oversight board will lead negotiations to restructure Puerto Rico’s debt, and all incurred charges must be paid for by the local government. The entity will also revise every fiscal decision by the commonwealth, including laws and budgets.

Credibility Warning

The governor recommended the seven board members to watch out for their “credibility and legitimacy” when carrying out designations or awarding contracts to consulting companies, in case these are associated to any local politician.

The governor was reacting to the contract the board granted Forculus Strategic Communications, owned by Francisco Cimadevilla, who worked with former Gov. Luis Fortuño 20 years ago at the Economic Development & Commerce Department and obtained contracts with La Fortaleza and the Government Development Bank (GDB) during Fortuño’s administration, between 2009-2012.

Two board members, its president, José Carrión, and former GDB President Carlos García, also worked close to Fortuño during his administration, which has raised questions about the former governor’s influence on the entity that will rule Puerto Rico’s finances for the following five years, minimum. Carrión is also brother-in-law of Resident Commissioner Pedro Pierluisi.

Gov. Alejandro García Padilla made his first official appearance before Promesa’s Fiscal Oversight Board on Friday, Oct. 14, 2016. (CB / File)

“I don’t want to delve into judgements like, for example, Francisco Cimadevilla, whom I know personally and with whom I have a very cordial relationship. Appointments must be made based on merits, and the board must care for its credibility and legitimacy before the country,” García Padilla said during a press conference for the new Cataño seafront inauguration.

Regarding Fortuño’s influence on the board, the governor said “it is something the board will have to get rid of, and try to eliminate any appearance of this because it has to watch its credibility before the country.”

“Gov. Fortuño was the one who issued the debt in Puerto Rico’s history. This is an accurate mathematical fact. I’m just saying the board must look out for its credibility with its decisions,” stressed the García Padilla, who believes the board’s credibility will influence the “effectiveness” of its decisions.

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