Sunday, August 25, 2019

Governor Issues Executive Order Halting BAN Payments

By on June 25, 2016

SAN JUAN – Gov. Alejandro García Padilla has expanded, by executive order, the Infrastructure Financing Authority’s (Prifa) state of emergency under the Puerto Rico Emergency Moratorium & Financial Rehabilitation Act and will not pay its bond anticipation notes (BANs), which are short-term bonds used to initiate economic activity that are usually covered by long-term financing.

afiIn his statement, the governor said the executive order “reflects the fiscal and liquidity crisis [Puerto Rico] is going through. It validates the emergency period for Prifa, declared by EO 2016-014, and declares the notes known as BANs…as ‘covered obligations’ under the Moratorium Act. With this action, any obligation to transfer any revenue or funds related to those notes is suspended.”

“The [island’s] economic scenario is getting ever worse, making the actions taken by this executive order necessary. It is because of this situation that we urge the U.S. Senate to consider the [Rico Oversight, Management and Economic Stability Act (Promesa)]. Although imperfect, this bill offers a solution with which we could face the fiscal emergency ahead of July 1,” the governor stated.

With the measure, the García Padilla administration seeks to ensure that the commonwealth continues to provide essential services to the island’s residents, according to a statement issued by La Fortaleza.

“Amid the absence of congressional action or a voluntary debt-restructuring agreement with the Commonwealth’s creditors, Puerto Rico’s fiscal crisis and the government’s liquidity has worsened, requiring that reasonable and necessary measures be taken to ensure public health, security, education and the well-being of Puerto Ricans,” the release reads.

The statement adds that García Padilla and his fiscal team “continue working actively” to find alternatives “that allow for effective negotiations with creditors and obtaining tools with which to achieve reviving [Puerto Rico’s] economy.”

The governor previously enacted a moratorium on other financing authority debt in April and has declared fiscal emergencies at the Government Development Bank and the Puerto Rico Highways and Transportation Authority.

Puerto Rico creditors have filed three different lawsuits challenging an act that gives the Puerto Rico governor the power to declare debt payment moratoriums.

 

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