Wednesday, October 5, 2022

House Passes Changes to Puerto Rico’s New Fiscal Agency

By on April 18, 2016

SAN JUAN — Upon the recent enactment of the Puerto Rico Emergency Moratorium & Financial Rehabilitation Act, a new public entity took over the Government Development Bank’s (GDB) roles as the island’s fiscal agent and financial adviser.

Almost two weeks after Gov. Alejandro García Padilla signed the moratorium legislation into law, La Fortaleza has yet to name the Puerto Rico Fiscal Agency & Financial Authority’s executive director, who will also serve as the entity’s sole board member. In addition to its fiscal agent duties, the entity is tasked with overseeing the commonwealth’s debt-restructuring efforts.

When asked about the matter on Monday by Caribbean Business, Public Affairs Secretary Jesús Manuel Ortiz said La Fortaleza expects to make the announcement “within the next days.”

A few hours later, House lawmakers — in a 35-4 vote with bipartisan support — passed amendments to the moratorium law, among which the appointment of the new fiscal agent would need the consent of the Senate. Moreover, the nominee cannot have worked in the GDB during the past five years.

The governor quickly countered he would veto the House bill, which now moves to the Senate, which reconvenes Thursday, for consideration.

Government officials told Caribbean Business on Friday that the administration had yet to decide who would be nominated to run the new fiscal agency, while they continue to discuss the matter. The commonwealth’s fiscal team met for hours in La Fortaleza on Friday to inform García Padilla on how they have proceeded following the enactment of the executive order for the troubled GDB, as well as the legal strategies in anticipation of an April 19 court hearing on the creditor lawsuit against the clawback measure enacted late last year.

The Puerto Rico Fiscal Agency & Financial Authority is “an independent public corporation and governmental instrumentality with separate legal existence, fiscal and administrative autonomy, and independence from the commonwealth,” according to the moratorium law.

It further provides for the authority to take over all debt-restructuring-related contracts between the GDB and external advisers, including those for Millstein & Co., Cleary Gottlieb and Citigroup, some of the stateside firms running point on Puerto Rico’s debt-restructuring efforts with its creditors.

All fiscal agency, financial advisory and reporting functions of the GDB are transferred to the newly created entity, and references in any local law to the bank in its role as fiscal agent and financial adviser “shall be understood to refer and apply to the Authority upon the enactment of this Act,” reads the law reads.

At the Fiscal Agency & Financial Authority’s discretion, it could bring current GDB employees onboard, while honoring the terms and conditions of employment in effect at the time of the transfer, including any acquired rights, privileges, obligations and seniority.

Government Development Bank, GDB

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