The reconstruction plan that the government of Puerto Rico submitted to Congress, seeks to offer a long-term programmatic vision that will direct, in an orderly manner, the up to $ 139 billion investment requested to the federal government for the revitalization of the island.
With this proposal - drafted with the endorsement of the Federal Emergency Management Agency (FEMA) - the Puerto Rican government meets one of Congress’ requirements for the Island to receive funds for the recovery after Hurricane Maria. The request for funds is contemplated in the Disaster Relief Requirements Act 2018.
The $ 139 billion request is the most optimistic scenario, and the most likely figure is $ 97,4 billion. It is an eleven-year plan, during which the largest investment would be assigned to housing, and energy and water related systems. That infrastructure has been the most affected by the hurricane and has an impact on the entire population. Works in transportation, telecommunications and municipalities are also contemplated in the plan.
It would be healthy that during the first two-year phase the investment was focused on strengthening the infrastructure to make it resilient before a new disaster ocurrs. The resources that are proposed in parallel to boost tourism, agriculture and manufacturing, would support three sectors of recognized development potential.
For the second phase, which would cover the next eight years, are being proposed plans to repopulate and reconfigure urban areas and stop emigration.
As a whole, this investment seeks to stimulate economic activity that, according to official indicators, was reduced by twelve percent after Hurricane Maria.
If congressional approval is received, the reconstruction plan may materialize the implementation of the fiscal plan certified by the Board. The discipline and rationality of this plan should be an important factor in the recovery of trust between Puerto Rico and capital markets, Congress and the White House.
The allocations prospect is an incentive for cooperation between the Puerto Rican government and the Board regarding the implementation of the fiscal year 2018-2019 budget. It is, of course, encouraging that the government has expressed its willingness to review the items in which there are differences with the Board. This guarantees the continuity of the public services and the adjustments for the balance of finances.
Although without definitive resolution, there has been a positive dialogue atmosphere between the Board and the government with creditors of the Sales Tax Financing Corporation (Cofina, Spanish acronym), in order to achieve a debt adjustment plan, which as of December 2016 was $ 17.3 billion. Prior to this preliminary agreement, the Government Development Bank announced that the agreement with its creditors is in its final stage. There are also preliminary understandings with Electric Power Authority bondholders.
These negotiations prove that the government and its creditors can resolve their differences outside judicial forums.
Precisely, the Boston Circuit Court of Appeals has just ruled against the automatic suspension of litigation initiated by bondholders. This decision applies to the Electric Power Authority, but its effect on other disputes with creditors is uncertain.
These events represent a work agenda that includes submitting the government´s financial statements requested by Congress, as well as the implementation of structural reforms contemplated in the fiscal plan.
Together with the massive investment in reconstruction, these steps are the pillars that will allow the Puerto Rican rebirth.
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