One month after Wanda Vázquez Garced took office, there has been a 180-degree turn in the relationship between the government and the Oversight Board, according to John Rapisardi´s statements, who is the leading legal advisor to the Fiscal Agency and Financial Advisory Authority (FAFAA).
Yesterday, during the September general hearing on Puerto Rico Title III cases, Rapisardi told Judge Laura Taylor Swain that after the forced resignation of Ricardo Rosselló Nevares, the government and the Board are “allies in prosperity, rather than rivals for power.”
As a result, according to Rapisardi, the government will seek to speed up the implementation of the fiscal plan, based on the “high degree of cooperation” between the parties.
The degree of collaboration is such that Rapisardi said the government will continue defending Law 29, but immediately afterward, he anticipated that the House Speaker Carlos "Johnny" Méndez, has already agreed to seek an alternative. The law, approved by Rosselló Nevares before leaving office last August, exempted municipalities from paying contributions to the “PayGo” pension system and the health reform. That action led the Board to file a lawsuit requesting to invalidate this law.
"FAFAA report is encouraging," Swain said, after learning about the events developed in the government after the leaked chat and corruption scandals that forced Rosselló Nevares out of La Fortaleza on August 2.
Rapisardi´s expressions showed what the government’s new public policy in fiscal matters and the island's debt renegotiation process would be. These represent a shift away from the combative stands that Rosselló Nevares adopted with the Board on issues such as pension cuts.
"The relationship between the Board and the new governor are positive," said the Board’s attorney Martin Bienenstock, stating that the parties seem to have reached an understanding on Law 29, as well as on issues such as obtaining more funds for the Electric Power Authority (PREPA) and advocating for more federal funds through Medicaid program.
Bienenstock described conversations between the Board and the government as "totally open, respectful and candid in all matters."
The adjustment plan
According to Bienenstock, that spirit of collaboration would have been the reason for the Board to postpone the presentation of the central government’s adjustment plan again. The attorney added that as part of these collaboration efforts there could be changes to the fiscal plan that would ensure “sustainable growth” of the island’s economic activity, but did not give details about those possible changes.
Bienenstock said that advisors to both sides have held constant meetings over the last few weeks, so the new date for submitting the adjustment plan would be on or before September 30.
While this month the Board will say how much money they intend to distribute among bondholders, pensioners, suppliers, and other government creditors, the federal agency has yet to get Swain to approve the extrajudicial process they will follow to address thousands of pending claims, including the 250 lawsuits the Board´s Special Claims Committee filed against government suppliers.
Bienenstock said there is progress in the dialogue with these suppliers, as some 150 suppliers expressed interest in participating in the alternative mechanism that would allow them to resolve Title III related claims out of court.
According to Bienenstock, about 20 of these cases should be resolved in the coming weeks. Others will negotiate extensions to continue conversations with the Board, while a minority could end up in court.
