Ricardo Rosselló and Elías Sánchez (horizontal-x3)
Ricardo Rosselló and Elías Sánchez (Ramón Tonito Zayas)

The Government of Puerto Rico is yet to submit an offer as part of the debt negotiations, and is waiting for a move by the creditors, to that effect. 

However, El Nuevo Día learned that the absence of an offer on the table was a request by the creditors who, since last week, have been holding meetings with representatives from the Government in New York, and this week they are ready to resume dialogues to exchange information. 

The government wants to reach an agreement with bondholders of the Puerto Rico Sales Tax Financing Corporation (Cofina, by its Spanish acronym) and those of general obligations (GOs) by this coming May 1st, when the stay against litigations expires.  

"That is the desire, but the ball is now in their court.  Now, they have to make an offer.  Without it, we cannot move forward," said Governor Ricardo Rosselló as part of his remarks at the "Puerto Rico Future's Path" forum, hosted by the Corporate Latin American Board (CEAL, by its Spanish acronym).

Roselló participated at the CEAL forum, which groups bondholders and investors in Puerto Rico, together with the Government representative at the Oversight Board (JSF, by its Spanish acronym), Elias Sanchez Sifonte. This journal was present while both officials answered the questions by participants, under the moderation of correspondent Joanisabel González.   

And although both Rosselló and Sanchez Sifonte have stated their interest in resolving Puerto Rico's debt by way of Title VI of the federal PROMESA Law, they left an open door yesterday to appeal to Title III, if necessary.  

Title VI allows for consensual agreement between the Government and its creditors, a vehicle under which Rosselló's current administration is participating in a mediation process toward an agreement, with the participation of Judge Allan Gropper. On the other hand, Title III envisions an active participation by the court, in a process similar to that of bankruptcy. 

"PROMESA brings forth a series of instruments that were previously unavailable to us: Title VI to renegotiate bona fide terms, but also bringing forth the Title III component.  As we have always stated, our preference is to renegotiate this in good faith.  We understand that this is what is most convenient for all creditors.  But truth be told, when the time comes, we will work for the discussions to bring a better end result for Puerto Rico," emphasized the senior executive.   

"Time has always worked against us but, until now, we have been able to overcome these obstacles and our desire - and that of our work team - is to sit down, be reasonable, and look at the numbers.  After all, it will all be grounded after evaluating the figures if the creditors believe they have a better chance otherwise, or if renegotiating in good terms is the alternative," he added. 

Sanchez Sifonte was doubtful that a court – in the face of PROMESA - has the "legal power to freeze the accounts" of the government.  "You may sue, but that is very distant from it being enforceable," he stated. 

Should May 1st come without any accomplishments with the creditors, the government is also contemplating several options, such as an agreement not to execute or head for court.   

 According to Rosselló's fiscal plan, which was approved by the OB, bondholders shall only be paid 20% of what the debt payment should be. 

Some creditors have publicly asked to revise the fiscal plan, but Sanchez Sifonte discarded that possibility during the forum. 

"This is not a process that pertains to the Government of Puerto Rico. It was the Board who established this parameter, since January.  The government had to abide by the various parameters (of the Board). PROMESA Law grants full power to the Board," assured Sanchez Sifonte.

"We are not talking here about the government sitting back with its arms crossed.  The government is cutting back significantly," he explained. 

He also raised the argument around the lack of knowledge on the questioning in regard to how much of the money, according to the fiscal plan, will be allocated to the essential services and how much won't. 

"The Law is new. There are still many groups engaged in discussion around the Moratorium Law, which was predicated under the powers of the State, which exist independently from the Constitution.  Under that theory, it was argued that one could spend the money to pay for essential services, above and beyond what the Constitution mandated.  That was the legal basis for the past administration in regard to the local moratorium aw.  (Some bondholders) are still engaged in the same discussion on what is essential and what is not.  PROMESA does not require any of that," he said. 

Sánchez Sifonte stressed that PROMESA does not demand that to certify a fiscal plan, the essential services would need to be identified, "and those are the only ones you would have to pay for." 

"That is not what PROMESA says. It contains 14 points.  Among others, it states that funds have to be allocated to invest in Puerto Rico, in order to pay for retirement, for essential services, but not only for that... If you do not look at those 14 points, you will always be asking the same question." he pointed out. 

However, after certification of the plan, the Government argued that the essential services had to be identified, and that said task would fall on the fiscal team, which would safeguard the essential services that are also not clearly laid down in the fiscal plan. 

The plan seeks to address a $7.6 billion deficit and contemplates cutbacks on government expenses that, for the following fiscal year alone, represent $1.623 billion and a whole new model for the Government Health Plan.

Confronted with the fact that cutbacks may have harmful effects on the already battered economy of the country, Roselló defended his work. 

"Precisely, our fiscal plan is not merely a fiscal plan.  It is a fiscal and economic development plan.  Number one, we have considered the impact of where the cutbacks are taking place.  For instance, it is not the same to dismiss 45,000 public employees where the expected impact is negative growth of the economy by 9%, than to begin to have strategies to curtail hiring, eliminate certain subsidies, to work with government mobility toward the maximization of resources," he explained. 

Moreover, Roselló mentioned other initiatives - both approved and underway - such as the labor reform, the permits reform, the tax reform, the creation of the Organization for Destination Management and the public-private partnerships which are understood to foster the Island's economic development. 


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