Governor Ricardo Rosselló Nevares said yesterday that the possibility of his administration calling for the Central Government or any public corporation to invoke the territorial bankruptcy procedure “is not far” following the most recent events connected with the negotiation of the debt.
He was referring to the rejection of a proposal by the Fiscal Agency and Financial Advisory Authority (FAFAA) to restructure Puerto Rico’s debt. Specifically, the Ad-hoc groups of general obligations’ (GO’s) bondholders and the Puerto Rico Sales Tax Financing Corporation (Cofina, by its Spanish acronym) expressed yesterday their rejection to the offer made by the administration of Rosselló Nevares.
“I reiterate my position. I always look for this to be done in a way that all the parties may reach an agreement, but as governor I have a series of tools at my disposal and, if I understand that this is the best alterative for Puerto Rico, then I will use all the tools I may have and that includes the provisions in Promesa (Puerto Rico Oversight, Management, and Economic Stability Act)”, he said in a press conference at La Fortaleza.
The likelihood that the Oversight Board (OB) may ask the Federal Court for the District of Puerto Rico to place the finances of a government’s instrumentality under Tittle III of Promesa, which provides for a territorial bankruptcy process, increases to the extent that a freeze on litigations associated to the debt is lifted on May 1.
The governor warned, however, that the arrival of this date does not necessarily mean that the Government and the negotiations collapse.
“We are still negotiating. I don’t know what’s going to happen this afternoon (yesterday’s) in those negotiations or tomorrow (today) morning. It’s hard for me to tell you we will take this step or the other, because we don’t have that information. As soon as we learn (what) the components are we’ll inform,” said the executive.
“These offers are quite complex. It’s not only a matter of giving more bucks. It’s about 10 or 15 factors that are being studied and depending on the modulation of those factors the best offer is produced. It may be that to some it may be a better offer than to others. It’s impossible to weave this into 17 different loans unless you sit at the table to discuss the various points,” he added.
Laws approved. On the other hand, the governor confirmed that he signed House Bills 938 and 939 into law. These are the initiatives that seek to reduce spending and increase the government’s revenues, according to that established in the Fiscal Plan certified in March by the Oversight Board (OB).
These measures have caused many labor protests, largely because fringe benefits for employees in public corporations are cut to equate them with those of the central government.