Melba Acosta: Gov’t should focus on fiscal plan
SAN JUAN – Now that the Fiscal Oversight Board’s members have been appointed, the government’s priority is to present it with its five-year fiscal plan, required by the the Puerto Rico Oversight, Management & Economic Stability Act (Promesa), to allow for debt negotiations with creditors because a stay on all lawsuits against the government expires in February.
The commonwealth government, U.S. Treasury officials and heads of local agencies have been updating the 10-year 2015 Fiscal & Economic Growth Plan (FEGP) and should turn it in soon to the Fiscal Control Board, which will be making recommendations for changes, former Government Development Bank President Melba Acosta said.
“The stay ends in February 2017 and by then we should have an agreement with bondholders…. It is a very short period of time, but in order to extend [the stay], the fiscal plan must be ready,” Acosta said in a radio interview.
President Barack Obama appointed the seven-member fiscal control board Wednesday, but his selections have not gone without criticism as they are mostly members of the business community.
Gov. Alejandro García Padilla said he has asked Richard Ravitch, a politician and businessman who served as Lieutenant Governor of New York from 2009 to 2010, to represent him at the board as allowed under Promesa.
Ravitch, who has been advising the local government, previously helped save New York in the 1970s and Detroit from financial ruin. But he also sits on the board of Build America Mutual (BAM), one of only three firms that insure municipal bonds and the only one without exposure to Puerto Rico.
All of the members of the board, the appointment of Carlos García, a former GDB president, has been the most criticized because of his connections to the government of former Gov. Luis Fortuño, who pushed for the layoff of thousands of government workers.
Acosta noted that while former elected officials could not be members of the board, the law did not prevent non-elected officials from being part of it.
García was behind some Sales Tax Financing Corp. (Cofina by its Spanish acronym) bond issuances, information he must have had to disclose to those who selected him, and he should refrain from intervening on any matters related to those bonds, Acosta said.
“All of that information, I assumed, had to be evaluated by the people who proposed or selected him. I understand there were no financial conflicts…. I think the group is varied and different. There are a lot of Puerto Ricans and that is positive…. We have to give the group space,” Acosta said on radio.
Regarding the fiscal plan the government has to turn in to the control board, Acosta said it is a very complex document that requires the input of numerous agencies.
The FEGP calls for aggressive structural reforms to reduce government size, the deficit and public spending, as well as proposals that achieve economic growth and improve labor participation to tackle Puerto Rico’s $70 billion debt load and taking the island back to the market.