The executive director of the Board, Natalie Jaresko, said the federal entity is moving forward in its goal of restoring the fiscal balance and renegotiating the public debt, but admitted that this task is more difficult given the little commitment shown by the United States Congress with Puerto Rico.
In an interview with El Nuevo Día, Jaresko answered each of the questions regarding performance reported this week by this newspaper, assuring that there are "measurable progresses" that, although "small, are important."
But at the same time, the Ukraine former finance minister admitted that the process of transformation driven by the Board does not move at the pace she would like and that the role of the entity is not understood either in Puerto Rico or in the federal capital.
Yesterday, Jaresko indicated that, in spite of Hurricane Maria, the Board expects to resume the correcto course that Puerto Rico needs.
"Those who expected the Board to come to govern are disappointed. Those who expected the Board to be in favor of the creditors are not happy and those who expected the Board to be against the creditors, neither. The reality between what the enabling law dictates, the powers of the Board and the relationship with the government is, by far, more complex than expectations," indicated Jaresko.
"I wish there was more support from Congress for Puerto Rico," added Jaresko when El Nuevo Día asked her how complex it has been to prosecute the Board's work.
"More clarity is needed. The second round of the supplementary aid package to address the disaster is still pending; CHIP and Medicaid funds are still pending. We need more confidence and clarity," added the executive, accepting that the Board will make decisions without knowing clearly what federal resources the Island will count on in the coming years.
This week, the Board indicated told the administration of Ricardo Rosselló Nevares that its fiscal plans do not comply with PROMESA and gave the Governor seven days to correct them. Among the changes, they requested to update the information of the federal funds that Puerto Rico would receive for its recovery.
Jaresko admitted to being "disappointed" because, in the federal tax reform, Puerto Rico was not exempt from the new taxes on US multinationals operating on the Island and a transition period was not granted to counterbalance the impact of that decision on the local economy.
Was the lobbying of creditors the reason why that support for Puerto Rico was not achieved?
"Congress has been extremely busy because the focus was on health issues and the tax reform. I do not think it is an issue with the creditors or the Board. We all have a duty to continue pushing and continue to build trust in Washington regarding that this process of moving Puerto Rico towards its economic viability and toward greater financial transparency is advancing," she said.
Request for federal support
The Board not only expects concrete actions of Congress. It has also requested support from the federal government.
On January 16, invoking section 103 of the PROMESA Law, the Board requested the transfer of federal employees to address the situation in Puerto Rico.
The request was made to the departments of Energy, Agriculture, Commerce, Transportation, Health, Housing, as well as the US Treasury, the General Services Administration and the Environmental Protection Agency (EPA).
According to Jaresko, requesting resources from federal agencies will save the Board time and address specific challenges.
As an example, Jaresko said that one of the critical aspects of the fiscal plan of the Puerto Rico Aqueduct and Sewer Authority (PRASA) is to understand if its plan for capital improvements complies with EPA regulations.
A day stumbling
Next month, the members of the Board will have served 18 months in office, that is, half of their term since they accepted the task of restoring the fiscal balance and access of Puerto Rico to the capital markets.
Jaresko will celebrate her first year at the head of the body that Congress endowed with powers over the elected government of Puerto Rico.
At the end of that period and an investment of about $90 millions paid Puerto Rican taxpayers, five fiscal plans that vanished with Hurricane Maria were approved.
In that period, the only voluntary agreement with bondholders -in the Puerto Rico Electric Power Authority- was rejected and the liquidation of the Government Development Bank (GDB) was approved.
But in the past 18 months, while Puerto Rico was under the oversight of the Board, PREPA has also run out of money, to the point of a possible closure this month, and bondholders are returning today to Court for the Title III cases, determined to litigate their debts. This based on the multiple motions for investigation under the 2004 Bankruptcy Code rule filed against the government and the Board.
In the midst of these storms, Hurricane Maria drowned Puerto Rico and the response to the disaster discredited the Island in the federal capital due to the confusing hiring of Whitefish Energy Holdings.
The revised plans
For Jaresko, the progress of the Board must be measured in light of its dual mandate: fiscal balance and access to the capital market. And achieving that -the executive explained- requires time and a series of reforms that the Board has just put on the table. And they did so by sending the Governor this week the first notices of violations to the PROMESA Law in the fiscal plans.
The government has time until February 12 to answer the requests of the Board.
And do you think that seven days are enough for the government to make all the changes that the Board has requested?
"Most of the information being requested must be supporting information for the estimates in the plan. I understand the information is available because if they are talking about the savings they will achieve, the details of that policy have to be there," said Jaresko.
Do you plan to certify the fiscal plans next February 23?
"That is our intention, there has been no change to date," answered Jaresko.
In a way, the changes required from the government could be interpreted as a way to comply with the PROMESA Law.
According to Jaresko, the creation of the office of the government's chief financial officer will allow staff to engage in financial disclosure tasks without being at the mercy of a change of government.
Regarding the tax issue, although reducing rates is a good idea, Jaresko said that this cannot be done without modifying the deductions, exemptions or special treatments that are granted. To that purpose, the Board asked the government to include the effect of the incentives and tax credits as expediture within the budget in the future.
"It's a different way of thinking. If you only think about the net of collections (to the Treasury), you do not understand what you are not receiving. If you want to continue with the policy of providing credits and exemptions, then you have to have transparency and say how much it costs," explained Jaresko.
Jaresko said that with the new fiscal plan, Rosselló showed a greater commitment towards the structural reforms needed.
Yesterday, Rosselló Nevares said that the negotiations to review the fiscal plans are still in place and that he will comply with the submission date imposed by the Board.
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