Jaresko talks university cuts, Prepa and FY18 budget
FAJARDO, Puerto Rico – Financial Oversight & Management Board Executive Director Natalie Jaresko said Thursday that while she believes the University of Puerto Rico (UPR) is one of the jewels of the island, the cuts to the educational institution should serve as an incentive to find other sources of funding.
During the Puerto Rico Manufacturers Association convention, Jaresko said the UPR “plays a critical role in the economy,” but at the same time, the commonwealth faces a severe fiscal crisis and “everyone needs to share in that pain.”
She noted that the cuts to the university should serve as an incentive to find other sources of revenues that it can attract, including additional funding in Pell grants and federal research funds.
As for talks with Puerto Rico creditors, the fiscal board’s executive director said negotiations are still underway with certain creditor groups, even if there are several issuers that have already filed for bankruptcy under Title III of the federal Promesa law.
“We have had successes like the restructuring agreement with Government Development Bank bondholders,” said Jaresko, but added that striking deals with other issuers has been more challenging.
In the case of the Puerto Rico Electric Power Authority (Prepa)—which was the first entity to strike a preliminary restructuring agreement with its creditors—Jaresko conceded that the board has yet to decide whether to submit the utility’s agreement (or RSA by its initials) through the consensual restructuring mechanism provided by Title VI of Promesa.
According to the federal law, the board’s goals are to balance the island’s budget, along with sustainable debt service levels, as well as to return Puerto Rico to capital markets at affordable rates.
Regarding economic development, she warned that relying on tax incentives is no substitute for doing other things to promote the economy. “I have said previously I believe the worst is over, but I did not mean to say that hard times are not ahead of us,” Jaresko said.