La directora ejecutiva de la Junta de Supervisión Fiscal, Natalie Jaresko. (semisquare-x3)
La directora ejecutiva de la Junta de Supervisión Fiscal, Natalie Jaresko. (GFR Media)

In reappointing Raúl Maldonado as Treasury Secretary, governor Ricardo Rosselló Nevares reassigned CFO functions to the department.

The separation of functions would have led to Teresita Fuentes resignation as Treasury Secretary.

The appointment of Maldonado as executive director of the Office of Management and Budget (OMB)  represents the first steps toward the creation of the Puerto Rico Office of the Chief Financial Officer (OCFO), a strategy the Oversight Board considers crucial to Puerto Rico´s financial recovery.

Yesterday, after the announcement of the appointment of Maldonado to the Treasury and the OMB, the Board director Natalie Jaresko praised the governor´s decision.

“These are valuable steps on the path to achieving fiscal responsibility and restoring access to the capital markets which are two of the cornerstones of PROMESA,” she said in written statements. 

However, the Board told El Nuevo Día that praises do not imply support or rejection to Maldonado´s appointment.

The Board welcomed the government´s announcement that “it is taking constructive actions to further the implementation of the OCFO” and they also stressed that their expressions are framed within those measures provided by the Fiscal Plan aimed at ensuring the responsible financial stewardship of Puerto Rico´s resources.

The creation of a OCFO was agreed between the Board and Rosselló Nevares early in 2017.

But almost two years later, the office in charge of consolidating accountability systems and government transactions as well as hiring tech companies proving such solutions; ensuring the proper disclose of financial statements and compliance with public accountability and sound administration has not even been included in a bill.

According to the Certified Fiscal Plan, the OCFO should have started operating on July 1, 2018. And three months later, as stated in the Plan, it should have completed the recruitment of staff. The role of the CFO was brought by former governor Alejandro García Padilla in 2013, through an executive order stating that the role would be in the hands of the secretary of the Treasury.

Meanwhile, Rosselló Nevares thanked Maldonado for assuming the position which the governor described as a result of a well-planned strategy toward the creation of the OCFO.

The governor explained that he asked Maldonado to assume the role of Chief of Staff since there were advances to be made in public policy and stressed that they wanted to implement the OCFO in order to transform and enforce a series of significant reforms.

However, until Tuesday, the only move Rosselló Nevares made regarding the OCFO was executive order OE 2018-034 which amended Padilla´s executive order.

The order specifically states that the CFO will be appointed by the governor and will serve as fiscal and financial advisor to the governor, what implies removing the CFO role from the Treasury and assign it to Maldonado to give way to a micro-management dynamic from La Fortaleza.

Financial Statements

While starting shaping the OCFO, that requires Legislative endorsement, the government is working against the clock in crucial issues such as financial statements, which public disclosure is among the CFO core duties.

Although Maldonado has been the CFO for the last two years, while he was Treasury Secretary and then Chief of Staff, the official said that now he will be able to enhance the initiative of compliance with financial statements disclosure. “This, because being in fiscal control of these agencies allows me to directly advance financial statements,” said Maldonado and added that bankruptcy and lack of resources has prevented to timely submit financial statements.

Early this year, the Board requested access to government financial data.

El Nuevo Día asked the Department of the Treasury and the Fiscal Agency and Financial Advisory Authority (FAFAA) if they have responded to the Board´s request but by press time there was no answer.

According to Fuente´s letter, the fact that agencies like the Government Development Bank (GDB) and the Sales Tax Financing Corporation (Cofina) failed to comply with the requirement and that data from the Police Department was not accurate caused a delay in submitting financial statements 

Fuente´s letter to the Board, dated January 11, states that staff shortage in the government has resulted in delays in submitting the information to government auditors.

Laura Quintero  and Gloria Ruiz  collaborated with this article.

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