The optimism shown by Treasury Secretary Steven Mnuchin that Puerto Rico can become a success story, gives confidence to the efforts aimed at recovering the island from over a decade of fiscal crisis and economic stagnation and the worst hurricane in a century.
We celebrate that Mnuchin has fulfilled his commitment to periodically visit the island. His personal attention to the revitalization process, shows his interest and confidence in the immense progress potential of Puerto Rico.
During his second visit since March, the Secretary stressed that there has been progress after the September emergency. His visit shows that the local government has done what is necessary to stabilize a healthy relationship with the Treasury. This alignment is crucial to boost a sustained economic development.
The Treasury Secretary brought the news that the local government has already reached a definitive agreement with the Federal Emergency Management Agency (FEMA) to access $ 2.253 billion through the Community Disasters Loan (CDL) program. Those funds mean that the threat of Puerto Rico having to reduce operations -due to insolvency- has been left behind.
Mnuchin said that the first priority of the transformation agenda of Puerto Rico is to create a competitive power grid with ample availability of energy resources at reasonable prices. In that sense, he welcomed the process initiated by the government to transform the Electric Power Authority. And he seems to have ruled out the possibility of the Treasury controlling the public corporation´s processes.
It is urgent that PREPA executive director José Ortiz, facilitates the debt negotiation process that keeps the company in bankruptcy through PROMESA Title III. It will also be a determining factor that he undertakes a transparent transfer of PREPA´s assets and operations to private hands, with a robust and independent regulatory entity.
According to Mnuchin, the other priority Puerto Rico has to focus on is working on those structural problems that caused the instability that was aggravated by the Hurricane.
Now, with federal funds already flowing, Puerto Rico has all the necessary conditions to start its reconstruction. Success depends on the island knowing how to make the most of a historic federal injection. Puerto Rico cleaning its battered image, before the markets and its own constituents, depends on the wise and responsible use of these funds, as well as a meticulous accountability. A modern, agile and transparent government structure, focused on the goal of rebuilding and generating far-reaching development is essential to this objective.
The federal official has warned that he does not foresee legislative changes to the federal tax reform. On the contrary, he is inclined towards possible beneficial adjustments for the island within the new contributory framework. In particular, with the designation of Opportunity Zones for communities going through economic stress and eligible for investment with federal tax incentives.
He has offered to attract investment himself, to the point that he will coordinate the visit of potential business partners for Puerto Rico.
Given this situation, as part of the recovery plan, the government and business sectors in Puerto Rico must refine their strategy to achieve the best treatment for the industrial sector on the island.
Also local government officials and the Oversight Board are called to seek unifying paths that lead to agreements.
Puerto Rico is in a unique position to radically change the economic, physical and social conditions that Hurricane María unveiled. Such a situation cannot stand excuses, patches or imprudence. The Island is awaiting for a change of direction that, finally, produces opportunities for the well-being of its citizens.
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