Thursday, October 28, 2021

Rosselló to control board: Liquidity problem is already addressed

By on March 8, 2017

SAN JUAN – Continuing the epistolary debate between Gov. Ricardo Rosselló and the fiscal control board, the governor responded Wednesday to the board’s recommendation that public employee work hours be cut, that his administration has already taken the necessary measures to meet the projected deficit and expects its proposal to be evaluated favorably.

“Perhaps they did not have the opportunity to review the administrative order issued yesterday by the Fiscal Agency and Financial Advisory Authority [FAFAA], in which we cut in terms of the budget nearly $625 million, which will lead to a balanced budget for 2019, as well as the control we imposed on tax credits, which will help strengthen our liquidity,” the governor said in a written statement sent to the media.

On left, fiscal board Chairman José Carrión, next to then Governor-elect Ricardo Rosselló. (CB / Limarys Suárez)

On left, fiscal board Chairman José Carrión, and then Governor-elect Ricardo Rosselló. (CB / Limarys Suárez)

“Yesterday’s order goes directly to the heart of their concerns and addresses these without the need to reduce the workweek and take more drastic measures. I trust the board will give itself time to complete the process and analyze the measures and data that it has been provided,” he said.

Also read: Board requires immediate government cuts, reduction of work hours

The board is expected to announce Monday the fiscal plan it will be certifying and which from that moment on will govern the Puerto Rico government’s public policy on spending.

In a letter sent to the governor earlier Wednesday, the board said that given the government’s precarious liquidity position, the Rosselló administration must reduce the work hours of public employees, the contracting of professional services and healthcare spending.

For the entity created by Promesa, these measures – assuming the public debt is not paid and in addition to those already suggested by the administration in the fiscal plan it presented – are necessary to keep the government running and providing essential services to the citizens.

Regarding the reduction of work hours – with which at least $35 million in monthly savings are expected – the board suggests four days a month for most employees of the executive branch, and two days a month for teachers and ” frontline personnel” of institutions that operate 24 hours a day. Those employees who carry out public safety functions would be exempt from the program.

Meanwhile, the legislative and judicial branches, as well as public corporations, would have to make cuts that produce similar savings to those proposed under the labor reduction program.

The fiscal board also called for cuts of up to 50% in contracting professional services, as well as a significant reduction in healthcare spending by negotiating drug prices and reducing the rates of health plans and providers.

“While we appreciate your focus on addressing Puerto Rico’s long-term fiscal and economic challenges, we think far more needs to be done immediately to reduce spending and avoid this critical cash shortfall. Given Puerto Rico’s lack of normal capital market access and our need to focus on a sustainable restructuring of debt it is neither practical nor prudent to address this cash shortfall with new short-term borrowing,” the board had said.

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