Fiscal board director clarifies: Puerto Rico debt adjustment plan expected by year’s end
Argues in favor of board, as U.S. lawmakers look to make Promesa more humanitarian
SAN JUAN – The executive director of Puerto Rico’s Financial Oversight and Management Board, Natalie Jaresko, said Monday it was unrealistic for the debt adjustment plan of the central government to be submitted by the end of April.
During an omnibus hearing last week, a lawyer for the board told U.S. District Court Judge Laura Taylor Swain, who is overseeing Puerto Rico’s bankruptcy cases, that a draft of the debt adjustment plan should be expected next month.
Jaresko, however, said the attorney meant to say the plan could be filed with the court, “at best,” in April. Nonetheless, she said the board expects to submit the central government’s debt adjustment plan by the end of the year.
“I don’t think it’s highly realistic to do this by the end of April,” Jaresko said.
The board still needs to restructure some $13 billion in general obligation bonds and some $50 billion in pension debt. The board and the Unsecured Creditors Committee want to repeal $6 billion of the GO debt, contending it violated constitutional provisions on debt limits.
While lawyers suggested the possibility of a cramdown in the central government’s debt, Jaresko said that was not the board’s intention.
Earlier in the day, Jaresko met with members of the U.S. House Natural Resources Committee, which oversees U.S. territories. Committee Chairman Raul Grijalva suggested changes to Promesa to make it more humanitarian. He also said a hearing on the law would be held next month, for which he was requesting Jaresko and others attend.
“I think the Promesa law is working. The fact that there is criticism is natural to the fact that we are achieving something,” Jaresko said.
While she noted that creditors and the people of Puerto Rico are not happy with the board, she said the panel is a temporary entity and that as soon as it can achieve its mandate of financial stability, it will go away.
“The fact that [the board’s work is] difficult, and the fact that there is a criticism, I think is natural to the fact that we are actually achieving something,” Jaresko said. “The creditors don’t like the board because the board does its job. They aren’t entirely happy with the work of the board, because it is not what they expected. The government, the legislature and some citizens of Puerto Rico are not happy with the board and I understand them because it is not pleasant to have an entity that has the power the board has in matters such as the budget.”
When asked about her expectations regarding the changes the majority Democratic Party in the U.S. House intends to propose, Jaresko said she does not have a position on the matter.
“The whole goal of having fiscal responsibility is so the people Puerto Rico can get better services,” she said.
Jaresko also spoke about recent comments made by former board Revitalization Coordinator Noel Zamot. She said she asked him if he was making any accusations against a specific individual and that he replied he was merely expressing frustration at the slow pace of investment.
“I think he was expressing the frustrations of the business community, which have long been held. He was not referencing any accusation against any individual or against any particular institution. He has said that to me. He has said that to the board. He has said that to everyone he has talked to,” she said.
Jaresko also said she did not have a problem with Zamot’s performance, and that frustration over Title V of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) is that is only for a subset of investments or critical projects.
Jaresko said Zamot resigned effective Friday. His remarks regarding comments made by officials regarding the granting of contracts, resulted in demands he alert the authorities of any alleged wrongdoing.
In a letter to Zamot that was published Monday morning, Christian Sobrino Vega, the governor’s representative to the board and executive director of the Puerto Rico Fiscal Agency and Financial Advisory Authority, wrote: “If you stand by the serious allegations attributed to you, I, on behalf of the Government of Puerto Rico, demand you immediately contact the Puerto Rico Department of Justice, the Federal Bureau of Investigations or any other appropriate entity in order to formalize and itemize your allegations.”
Sobrino added that in “the absence of evidence or actual knowledge of wrongdoing, you have a duty to immediately retract your statements given that they would represent an unjustified attack against Puerto Rico and its institutions.”