Money (Law), Bankruptcy, gavel

Faced with the statement issued by the Financial Oversight and Management Board (FOMB) objecting to the amendments made by the Puerto Rico Senate to the bill on the enabling law of the Puerto Rico government’s Plan of Adjustment (POA), the head of the House Finance Committee Jesús Santa, said that a meeting could be held between the Legislature and the FOMB to discuss the matter.

The Board issued a statement last Friday stating that House Bill 1003 would make the seventh version of the adjustment plan unsustainable for Puerto Rico, as they understand that it conditions the issuance of bonds on provisions that would cost tens of billions of dollars, which Puerto Rico does not have as the island government is bankrupt, and it would prevent public pensions from being frozen and the system reformed.

“A space is being made so that the technical groups of the House, Senate and the Board can sit down to go into detail on each of the proposals made by the Senate and clarify the cost that they entail. I know that (Senator) Juan Zaragoza’s group has those numbers and they are not as scandalous as they (the Board) intended to exemplify in the letter we received,” Santa told EL VOCERO, the sister publication of THE WEEKLY JOURNAL.

The FOMB’s Position

As per the Board’s statement: “Puerto Rico House Bill 1003, as amended and approved by the Senate, conditions the issuance of the bonds on provisions that would cost tens of billions of dollars. In addition to preventing any cuts to government retirees’ pension benefits, the Senate’s bill would prevent the freezing and reforming of the insolvent pension plans that previous Puerto Rico governments underfunded for decades. It adds costly mandates and massive spending increases as a condition to implementing the Seventh Amended Plan of Adjustment.

“The Oversight Board has been working for five years in good faith with retirees, unions, bondholders and other creditors to negotiate a Plan of Adjustment that is fair and sustainable, and with the Legislature and the Governor to pass the legislation to issue new bonds. The Oversight Board is convinced that the legislation passed endangers Puerto Rico’s ability to come out of bankruptcy and repeats the unsustainable spending practices and policies that drove Puerto Rico into bankruptcy in the first place.

“The outrageous costs of the amendments to House Bill 1003 taken together would make the confirmation of the Seventh Amended Plan of Adjustment impossible. Therefore, the Oversight Board would be forced to withdraw the proposed Plan of Adjustment from the U.S. District Court.”

Lawmakers Speak Out

The Board’s rejection of the measure was issued just hours after House Speaker Rafael “Tatito” Hernández announced that the Chamber would not consider the bill until the FOMB guarantees in writing that it would comply with the agreements established so that there are zero cuts to pensions, and funds earmarked for the island’s municipalities and the University of Puerto Rico.

Rep. Lourdes Ramos, author of the measure that gave way to Act 7-2021, known as the Dignified Retirement Law, alleged that the “threatening” letter from the Board reflects that it wants to guarantee money for large interests.

“How good it is when you can tell people: ‘I told you so.’ In my speech in the Chamber, when the bill was being discussed, I warned them that this was a measure that gave a blank check to the Board because what was contained there did not guarantee anything that the Board would accept it,” Ramos said.

For his part, pro-independence representative Denis Márquez said that the measure is “terrible for the country… The Board has been consistent in its terrible and neoliberal policies. Each and every one of their communications, their expressions, their positions in court are in defense of their POA and their terrible policies for the country, which impoverish people and workers, and eliminate and mutilate public services to the benefit of great interests,” he charged.

For the spokesperson of the Movimiento Victoria Ciudadana in the Senate, Ana Irma Rivera Lassén, the FOMB letter corroborates her position that the Board had to be blocked in such a way that it had to go to the Legislature to negotiate the Plan of Adjustment. “We will be very vigilant about what is happening because I think the Legislature should take advantage of this time is to tell the Board: ‘Well, we are not going to do anything to issue the bonds and we have to sit down and talk about the POA,’” Rivera said.

-Managing Editor Rosario Fajardo contributed to this story.

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