Thursday´s hearings in the U.S. House have once again highlighted the importance to strengthen the dialogue between the Puerto Rican Government and the Oversight Board as a vehicle for the revitalization of Puerto Rico through PROMESA.
PROMESA provides Puerto Rico the map to revitalize public finances and restructure the debt to access capital markets and boost economic development.
The recent hearings in Washington showed the interest of members of Congress and the government of Puerto Rico to seek alternatives with sensitivity towards the people of Puerto Rico, and with responsibility towards creditors. An honest dialogue and forward-looking decisions can represent an effective tool for the implementation of fiscal measures and local structural reforms, in light of PROMESA.
By sending the Board nominations to the Senate, President Donald Trump has recognized the importance of the continuity of fiscal processes that now become even more relevant for a solid recovery after the hurricane, with federal assistance.
The government and the Board should set aside their differences to find common ground on which to anchor the foundations of a profound transformation. They face the urgent task of reaching agreements to jointly draw a truly effective and viable Fiscal Plan. Based on that plan, with realistic projections, they must prepare a responsible budget that will advance fiscal order.
A transparent and timely budget and a fiscal accountability system are essential to achieving fiscal health and debt negotiations. However, full and timely compliance with the delivery of audited financial statements, that are necessary to restore the confidence of financial markets, is still pending.
Dialogue and collaboration also place Puerto Rico in a better position to identify new opportunities for debt restructuring. The Restructuring Agreement reached last night with an important group of PREPA bondholders that reduces debt services in approximately $ 3 billion or 40 percent over the next few years is a good proof of that. Through this agreement, the parties could set a significant step towards the transformation of the energy sector and, according to the government, outline the route for PREPA´s exit from bankruptcy under PROMESA Title III. It also sends positive signals to investment markets.
As in this case, demonstrating purpose of unity and a real capacity to reach agreements facilitates and strengthens Puerto Rico's efforts to build bridges that also move to an honest dialogue with the federal government, both in Congress and in the White House.
The island certainly does not need to be trapped amid partisan tensions that arise as 2020 elections get closer. Important federal reconstruction funds – on which the island is pinning its hopes for economic reactivation- are at stake while political heat threatens to reach the very provisions of a law created to restore the fiscal health and, as a result, the island´s economic health.
It is time for Puerto Rico to get out of the fiscal and economic stagnation affecting public administration, partly due to short-term approaches. The focus should be on finding solutions to the island´s major challenges. Responses to the island´s structural challenges require a willingness, openness, and generosity from all parties. The result is worth it. The recent agreement on PREPA´s bonds is a significant step forward.