Thursday, December 2, 2021

Puerto Rico Debt Restructuring Bill Moves Amid Criticism

SAN JUAN, Puerto Rico (AP) – The Senate and House of Representatives of Puerto Rico on Tuesday approved a bill that would cut the central government’s debt in half, but also sparked protests and fierce exchanges between lawmakers and the federal control council, which oversees the territory’s finances. USA. …

The bill aims to end a bankruptcy-like process that began after Puerto Rico announced in 2015 that it could not pay off more than $ 70 billion of public debt accumulated over decades of mismanagement, corruption and excessive borrowing. … In May 2017, the government filed for the largest municipal bankruptcy in the United States.

The bill would allow Puerto Rico to cut its debt by more than $ 30 billion, issue $ 10 billion in new debt, and award about $ 7 billion in cash to bondholders who have not been paid for nearly five years. Critics say the Puerto Rican government does not have the funds to stick to its proposed debt service and warn of impending austerity measures.

However, the bill, passed by 14-13 votes in the Senate and then 34-12 votes in the House of Representatives, is still in limbo because it does not enjoy the backing of a supervisory board, although Puerto Rico Governor Pedro Pierluisi supports from this. …

“Today we have taken a step forward towards the end of our government’s bankruptcy and the departure of the board of directors,” he tweeted.

One of the biggest disagreements between the Puerto Rican government and the board was the proposed reduction of some state pensions. The government refused to approve the bill that contained any cuts in state pensions, while the board sought to cut pensions above $ 1,500 a month by 8.5%, affecting about 40,000 retirees.

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Some lawmakers have also called for zero cuts for the University of Puerto Rico, the island’s largest public university, and for the island’s 78 municipalities.

Two organizations representing Puerto Rico mayors warned in a statement that some city services could still be cut as a result of the bill.

“Municipalities have already made big sacrifices and budget adjustments to support their services, some with reduced working hours and others with layoffs,” officials said.

On Tuesday night, the supervisory board issued a brief statement stating only that it would carefully assess the measure, although it had previously stated that it would not approve the bill.

The stalemate between the board of directors and lawmakers threatens to wipe out nearly five years of negotiations with bondholders in a process similar to bankruptcy, which brought in about $ 1 billion in attorneys. It could also subject Puerto Rico to litigation, which was temporarily suspended as part of the process, and force the government to pay bondholders.

Both sides are expected to mediate after federal judge Laura Taylor Swain warned on Monday that she would not postpone the November 8 approval plan, adding that “my patience is running out.”

Puerto Rican Senator Jose Antonio Vargas Vidot said it would be better not to consider the law and go straight to mediation.

“The patience of the judge and the people is running out,” he said.

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