Friday, September 18, 2020

Puerto Rico gov agrees to back fiscal board proposal to replenish Emergency Reserve via $536 million appropriation

By on June 25, 2020

To offset use of fund in several emergencies; aim to fund emergency reserve with about $1.7 billion over 10 years

SAN JUAN – The Financial Oversight and Management Board for Puerto Rico announced Thursday that it proposed to the governor of Puerto Rico and the legislature to replenish the Emergency Reserve that is part of the certified fiscal plan. 

Gov. Wanda Vázquez said she agreed with the board’s proposal: to appropriate up to $536 million from government cash and previous year budget surpluses through a special appropriation to replenish funds tapped by the government, including following Hurricane Maria, Tropical Storm Dorian, the series of earthquakes and the COVID-19 pandemic. 

“With great enthusiasm, I announce that we have reached an agreement with the FOMB to allocate $536 million to the Emergency Reserve, an unprecedented amount that will help us deal with any emergency, including this season of hurricanes, earthquakes and the current pandemic caused by COVID-19,” Vázquez Garced said in a statement later Thursday announcing her support for the board’s proposal. “Amid the lessons learned from these events, having a robust emergency reserve and with enough money is essential to provide direct assistance to our people and to be prepared at any time to quickly respond to emergencies and possible future disasters. Puerto Rico is and will be in good hands.”

The Emergency Reserve “will ensure that the Government has the necessary funds to help the people of Puerto Rico in case of natural disasters and other emergencies fast and effectively,” said the board’s executive director, Natalie Jaresko. “The Emergency Reserve established in the 2018 Certified Fiscal Plan has strict rules that ensure the government can use the funds only for emergencies, not for other government expenses. The funds should be available when unexpected disasters strike to provide urgent relief to the residents of Puerto Rico.” 

“Over the last 12 months alone, the Emergency Reserve provided direct assistance to people affected by the earthquakes, provided food and shelter, funded the temporary relocation of schools during the pandemic, and provided vital support to municipalities,” Jaresko said. “Now, as we prepare for hurricane season, we can be assured resources will be available to ensure a swift response in case of need.” 

The Emergency Reserve is funded every year with a regular $130 million appropriation from the government’s annual budget through Fiscal Year 2028. The board’s proposed appropriations would replenish the $260 million contributions from fiscal years 2019 and 2020, and $276 million the Puerto Rico government used as emergency funding in fiscal years 2017 and 2018.

“The proposed special appropriations, together with remaining unused funds from previous years and future Emergency Reserve contributions outlined in the Certified Fiscal Plan, would provide the Government of Puerto Rico with a total Emergency Reserve of $1.7 billion in 10 years, in line with the International Monetary Fund’s definition of an adequate emergency reserve,” the board said.

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