The Puerto Rico Oversight Board extended the stay on debt-related litigation to May 1 and the deadline for the governor to submit a 10-year fiscal plan to Feb. 28.
Prior to the action at the board's meeting in Puerto Rico Saturday, the stay on litigation was to elapse on Feb. 15 and the Jan. 15 deadline for the governor to submit a plan had already passed.
The board told Gov. Ricardo Rossell- to submit a version of the plan by Feb. 21, to provide time to review its economic assumptions and revenue forecasts, board member Carlos García said at the meeting.
The board adopted March 15 as the deadline for it to certify a fiscal plan and March 31 as the date for it to release implementation plans for all of its major initiatives.
The Puerto Rico Oversight Management and Economic Stability Act was enacted last year to address the island's debt crisis and sagging economy. It directs the board to work with the governor to create a minimum five-year fiscal plan that would, among other things, provide the commonwealth with a balanced budget, renewed access to the capital markets, funding for essential public services and pensions, and a sustainable debt burden.
The board on Saturday also passed a measure requiring the Puerto Rico Electric Power Authority, Puerto Rico Aqueduct and Sewer Authority, Government Development Bank for Puerto Rico, Puerto Rico Highways and Transportation Authority, Public Corporation for the Supervision and Insurance of Cooperatives to submit first drafts of fiscal plans to the board by Feb. 21. The board told the University of Puerto Rico to submit a draft fiscal plan by March 31.
The board reiterated its insistence that the fiscal plan result in a structurally balanced budget by fiscal 2019, without relying on unexpected federal help. The definition of a structurally balanced budget doesn't include making all scheduled debt payments.
Referring to a Jan. 18 letter from the board to Rossello demanding $4.5 billion of cuts or revenue increases, Board Chairman José Carríon III said:
"The board also acknowledged the governor's ability to make policy decisions that deviate from the board's recommendations as long as they produce sufficient savings and increase revenues to accomplish PROMESA's requirements with a substantial degree of certainty acceptable to the board."
Some governor-proposed changes to the board's Jan. 18 proposals may be OK, "as long as the ultimate fiscal plan is based on solid savings and revenue projections, a once and done approach, and not simply on hope or predictions that various changes will generate more revenues in the future," Carríon said. He then immediately repeated his comment for emphasis.
At the meeting representatives of Rossell- seemed to minimize the differences between the governor and the board about austerity.
Whereas in a Jan. 20 letter the governor had said there were "clear differences" between his approach and that of the board, at the Saturday morning his non-voting representative on the board, Elías Sanchez, said that Rossell- is also seeking a "one and done" approach. He said the Jan. 20 letter was consistent with achieving a structural balance by fiscal year 2019.
In another meeting development, Puerto Rico's liquidity advisor, Conway MacKenzie managing director Mauricio Sanchez, said the central government expected it would receive enough money to keep the government operating with internally generated cash through the end of the lawsuit stay on May 1.
At the meeting board member José Gonzalez, in remarks that the board had apparently endorsed before the meeting, said Puerto Rico's debt would clearly need to be restructured. He said a debt sustainability analysis would have to be done.
At Saturday's meeting the board also appointed certified public accountant and lawyer Ram-n Ruiz-Comas as interim executive director and Citigroup Capital Markets as financial consultant.
