Friday, March 29

Government of Puerto Rico and the Board celebrate confirmation of plan to restructure debt on the island while opponents call it a “death sentence”



NEW YORK – Activists inside and outside of Puerto Rico thundered against the confirmation by federal judge Laura Taylor Swain of the Debt Adjustment Plan (PAD) to restructure the island’s debt with bondholders, understanding that it puts at risk the workers’ pensions and will aggravate the fiscal situation of key entities such as the University of Puerto Rico (UPR).

This Tuesday, the judge of the Court of the Southern District of New York gave her authorization so that the provisions of the PAD, with which it seeks to reduce the public debt from $70,000 million to about $34,000 million, be applied.

Taylor Swain’s decision comes almost five years after the island, a United States territory for more than a century, declared bankruptcy.

Under the agreement, some $21 billion will be cut in general obligations, bonds from the Public Buildings Authority (AEP) and the Retirement Systems Administration (ASR), as well as millions of dollars in debt with government contractors.

This implies an 80% reduction in debt, and will save the central government more than $50,000 million in payments to creditors.

They anticipate cuts that will impact basic services to citizens

However, the detractors of the agreement also consider that the same will involve cuts in agencies that will directly impact services to citizenship, while compromising the General Fund or the main source of income of the Government of Puerto Rico.

The Fund receives the money collected by the Department of the Treasury. From that pot, the Legislative Assembly allocates to the agencies to pay for the different service and public investment programs each fiscal year.

Julio López Varona, spokesman for the Center for Popular Democracy, warned that the judge’s decision will take the island down a path of austerity and a new bankruptcy as the deal remains untenable.

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In the opinion of López Varona, the judicial determination will aggravate the economic situation of Puerto Ricans that for the past years has forced thousands to leave the island.

“We are talking about more funding cuts, further compromising our services and potential increases like the ones we have seen for the past 10 years,” said the lawyer, also referring to the high costs of electricity in Puerto Rico and the arrival of LUMA Energy. , current private operator of the system.

“We know that the deal is untenable. Many, many economists have said that Puerto Rico is not cutting enough debt, it is a recipe for disaster,” added López Varona as quoted by The New York Times.

For his part, the economist and professor at the University of Puerto Rico, José Caraballo-Cueto anticipated an increase in taxes as a result of the judge’s resolution.

“What is happening with the General Fund will translate into greater austerity measures in essential services and higher taxes to meet payments,” he summarized.

Approval of the PAD is a death sentence for Puerto Rico

The Citizen Front for the Audit of the Debt, an entity that led protests at the end of last year against the agreement while hearings were being held in the Federal Court of Puerto Rico, also thundered against the ruling and described it as a death sentence for Puerto Rico.

“We maintain that this payment plan is neither viable nor sustainable. The reduction made to the debt in bonds leaves us in a very similar place to where we were before the bankruptcy, having to continue tolerating more poverty for our people, implementing more austerity measures and cost-of-living increases to ensure payment to vulture bondholders. An important opportunity was lost to give our island a new start,” Eva Prados, spokesperson for the Citizen Front for Debt Auditing, said in a written statement.

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They question the impact of teacher retirement

For her part, Mercedes Martínez, from the Broad Front in Defense of Public Education, argued that the agreement directly affects the retirement of thousands of teachers in Puerto Rico.

“We repudiate the decision to Judge Swain who did not do justice to the teachers of this country endorsing this terrible tomb to our retirement. This debt adjustment plan is unfair and dehumanizing, putting the weight of payment of an unaudited debt and the majority illegally issued in the teaching profession that loses their right to a decent retirement to pay millions of dollars to unscrupulous bondholders, ”said the spokesperson.

In passing, he blamed legislators and Governor Pedro Pierluisi for their support of the plan and the Fiscal Control Board, a group established by Congress in Washington through the PROMESA law (Puerto Rico Economic Supervision, Administration and Stability Law). that monitors local finances and that debt payments are met.

“Those who are truly responsible for this terrible decision are the Legislative Assembly and Governor Pedro Pierluisi, who gave their support to the Fiscal Control Board instead of promoting the cancellation of the debt and defending pensions and essential services, as was his duty to the people,” Martínez denounced.

PAD does not protect future employee pensions

Sonia Palacios, from the Front in Defense of Pensions and Let’s Build Another Agreement, questioned that the agreement does not protect future pensions.

“Although the confirmation of the PAD protects current pensions, it rules out the adjustment to pensions according to the increase in the cost of living. This imposes a gradual reduction to our pensions. In addition, the principle of ‘zero cuts’ was not extended to future pensions for teachers and other public servants. Those responsible for this are the Governor and the legislators who betrayed the Dignified Retirement Law and did nothing to defend it. We are going to inspect and demand justice. We are not going to remove ourselves,” Palacios warned.

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Pierluisi considers agreement a transcendental step to get out of bankruptcy

But not everyone spoke out against the PAD and its confirmation. Pierluisi indicated that, although the plan is not perfect, it is very good, since it supposedly protects pensioners, the university and the municipalities.

The official, who cataloged the agreement as a great step for economic recovery, anticipated precisely what they repeatedly deny groups calling for a debt audit: that the island is heading for a closure of the bankruptcy process.

“Significantly reduces the debt of our Government at a sustainable level that will allow us to meet our obligations and, at the same time, have the resources to grow our economy and guarantee essential services to our people,” the governor said in written statements.

The Fiscal Control Board expressed itself in the same terms when indicating that it expressed, through Twitter, that Puerto Rico was beginning a new chapter in its history.

“PR can begin to move from fiscal instability and insolvency to a future of opportunities and growth,” the Board shared on the social network.

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Opponents in Puerto Rico call the debt on the island “illegal”, while a NYC judge leads hearings to confirm the adjustment plan with bondholders


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