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Alejandro García Padilla also insisted that restructuring the debt is the strategic route the Oversight Board (OB) should follow to deal with Puerto Rico’s crisis. (Archive/GFR)

FAJARDO – While Governor Alejandro García Padilla warned yesterday that drastic measures to cut government services or jobs would bring back “economies that foster depression,” his successor, Ricardo Rosselló, claimed that the collaboration of the federal government is necessary to deal with the fiscal crisis.

García Padilla also insisted that restructuring the debt is the strategic route the Oversight Board (OB) should follow to deal with Puerto Rico’s crisis.

“The route is restructuring the debt to a level where we can pay it with the incomes we currently have, while at the same time investing in the economy. I am sure that the OB will end up where we said: Title III of PROMESA. There is no other way,” said García Padilla.

“Title VI benefits the bondholders exclusively. It does not benefit the people of Puerto Rico. Title III is an impartial judge. What the people of Puerto Rico are asking is that the debt be submitted to an impartial judge. The question people have to ask themselves is why the bondholders don’t want an impartial judge,” he elaborated.

García Padilla and Rosselló issued these statements after the contents of a letter sent by the members of the OB to the outgoing Governor were made public. The letter calculates the deficit at $67.5 billion, while urging the incoming government to privatize assets, revise service rates, and end government dependency, so as to grow the working class. It also suggests more specific measures, like putting an end to the budgetary formula for the University of Puerto Rico, privatizing the State Insurance Fund Corporation, and handing over the Island’s infrastructure to external operators.

As for those measures, Rosselló said that “he still hasn’t been able to evaluate them closely.”

“The important thing is that Puerto Rico’s current situation has been ascertained, that the public policy with which we made a commitment to the people is geared towards having a healthy management of public finances,” he upheld, insisting that they will take quick action.

For his part, García Padilla seemed satisfied with the deficit estimate made by the OB. “Those are our numbers. How many people thought I was exaggerating?” he claimed.

That said, he reiterated that, depending on the mechanism chosen from PROMESA by the OB and the incoming governor, Puerto Rico will have funds for next February.

“If they go with Title VI, Puerto Rico will run out of money in February. If we go with Title III, we have to pay in February,” he noted.

“As member of the Board, the information that I have is that the OB has not made a decision between Title III or Title VI,” he added.

That's Coming

OB Chairman José B. Carrión III said, “that’s coming,” when he was asked if the renegotiation of the public debt was part of the corrective path set by the new federal entity in charge of Puerto Rico’s finances.

He claimed that they will reach voluntary agreements with the bondholders and will push for an adjustment of accounts, which will have to be paid for by the general population.

“If they think that the government of Puerto Rico will make additional reforms between December 21 and February 15, they are not being realistic, and that is not what they are saying,” the Governor asserted.

Likewise, the OB is not considering the continuation of federal funds through a substitute for Obamacare, or of incentives from the US Internal Revenue Service to continue with the 4% tax on foreign companies.

“Even though the Board, in the process of calculating and developing a fiscal plan, has not considered the collaboration of the federal government, the truth is that it has to be a resource for all Puerto Ricans, and our administration will be going after it… The federal government has a responsibility to act, and we have ours. It is imperative that, as soon as we act, they also follow suit,” Rosselló pointed out.

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