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Old 12-23-2016, 02:27 PM
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Mary Pat Campbell
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Join Date: Nov 2003
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http://www.commondreams.org/newswire...-restructuring

Quote:
Puerto Rico Oversight Board Moves Forward on Debt Restructuring
WASHINGTON - Puerto Rico's "control" board sent a letter to current Governor Alejandro García Padilla and incoming Governor Ricardo Rossello stating areas for fiscal plan review and that debt restructuring talks are moving forward. The Financial Oversight and Management Board of Puerto Rico begins conversations with creditors this week.

"It's critical the board is moving forward with the process to restructure Puerto Rico's debt," said Jubilee USA Executive Director Eric LeCompte. LeCompte testified to the board in November and suggested the debt be reduced by as much as 60 percent. "I'm encouraged by statements from board members that a deep reduction of Puerto Rico's debt is needed."

The oversight board and debt restructuring process for the US territory are products of Congressional action this past summer. The Puerto Rico Oversight, Management and Economic Stability Act also temporarily prevents debt collection lawsuits against the heavily indebted island. Unless a formal debt restructuring process moves forward by February, the moratorium on lawsuits will expire.‎

"If talks between creditors and Puerto Rico fail to achieve a deep cut in the debt, the oversight board needs to authorize the formal court arbitrated restructuring process," noted LeCompte. "Solving this crisis starts with restructuring the debt. Creating economic conditions for growth depends on a deep cut of the island's debt."

Read the letter

Read Eric LeCompte's testimony to the Financial Oversight and Management Board of Puerto Rico in November

Read a timeline of Puerto Rico's debt crisis
Letter:
https://d3n8a8pro7vhmx.cloudfront.ne...pdf?1482340797

Quote:
NATURE AND MAGNITUDE OF PUERTO RICO’S CURRENT FISCAL AND
ECONOMIC PROBLEM
Puerto Rico has a massive fiscal deficit, a declining economy and no access to capital markets.
To understand the magnitude of this problem, the Oversight Board and its advisors have been
working diligently with the Government and its advisors to develop a “baseline gap” analysis
that answers the following question: “What would happen to Puerto Rico’s fiscal situation over
the next 10 years if all current obligations remain as they are and no corrective actions are
taken?”
To answer this question, we requested the current Administration to make certain modifications
to its models, including an economic forecast based on current law and policy, updated pension
assumptions, and spending projections that reflect existing obligations and current spending
levels. These changes, based on the latest information available as well as updates to other
assumptions, result in a fiscal gap of $67.5 billion over the next 10 years. The implications of
this situation are dire:
 The $67.5 billion projected budget gap is equivalent to approximately $54,000 per Puerto
Rican family, or 2.8 times the average Puerto Rico median annual family income. In
other words, unless action is taken, covering the enormous deficit would require the
equivalent of EVERY Puerto Rican family having to pay $5,400 EVERY year over the
next 10 years, for a total of $54,000 per family.
 The Government would have to reduce expenses, increase revenues or both to close an
average annual budget shortfall of $7 billion (out of about $20 billion in annual spending)
to meet its current legal obligations.
 Even if the Government made no debt payments (which is legally and equitably not an
option), Puerto Rico would face an average annual budget shortfall of more than $3.2
billion.
A decline in the gross national product (GNP), likely larger than what has occurred over
the past years, is expected.
 Puerto Rico has limited or no ability to finance such a deficit through additional
borrowing.
We will continue to evaluate the baseline numbers in the FEGP as part of the certification
process. Specifically, the Oversight Board is seeking an independent third party validation of the
starting point of the Baseline Projection and the bridge from the last available audited financial
statements of fiscal year 2014.
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