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Rosselló Signs Financial Emergency Act

By on January 29, 2017

SAN JUAN — Governor Ricardo Rosselló signed today the Financial Emergency and Fiscal Responsibility Act, which will create a moratorium period on debt payment, aim to guarantee essential services, and increase the governor’s powers to manage the island’s finances.

Likewise, the law –which substitutes former Gov. Alejandro García Padilla’s Moratorium Act– will allow Rosselló’s administration to segregate funds that will eventually be destined to the public debt’s payment. The government insists that the law is a step toward achieving agreements with creditors and restructure Puerto Rico’s debt outside a courtroom.

See also: Elías Sánchez says gov’t to spot and hold funds for debt obligations

“What this law allows us to do is, based on Puerto Rico’s resources, comply with those who have invested, with those who have believed in Puerto Rico, while denoting that our priority is to pay for essential services and the people’s work,” detailed Rosselló during a Facebook Live published in La Fortaleza’s official account.

According to the island’s chief executive, Act 5 provides the government with the necessary tools to prove Puerto Rico’s credibility, according to available capital to fulfill its economic commitments.

“As you will see within the coming days, it will be a very powerful instrument to allow the people of Puerto Rico and also the government to restore credibility, but also to maintain the essential services that are so important for our people,” he stated.

Sections 201 and 203 of the law state that the governor will pay the debt as long as essential services can be ensured, such as health, safety, and the population’s well-being, which includes education and assistance to residents.

See also: GO Bondholders Call Upon Fiscal Board to Claw Back Cofina Funds

For his part, the government’s representative before the Fiscal Oversight & Management Board, Elías Sánchez, indicated that the new law keeps a moratorium, although it would be in force “during [P.R. Oversight, Management & Economic Stability Act] a stay on Promesa” — a mechanism recently extended by the Board until May 1, 2017, and may be extended by an additional period of three months. If the stay were to be raised, the moratorium would cease on a local level.

The measure was approved without amendments by the Senate during Saturday evening, with a total 22 votes in favor and 8 against. The House of Representatives approved it as well on Friday night, days after receiving the executive’s bill.

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