Puerto Rico may be poised to reshuffle its finance team, according to media and analyst reports.
David Chafey may resign as chairman of the Government Development Bank, Municipal Market Advisors managing director Robert Donahue said in an interview, citing an unnamed Puerto Rico source.
Puerto Rico news site El Vocero reported that Secretary of the Treasury Melba Acosta Febo may become GDB president. Current interim GDB president José Pagán would leave the GDB. Vocero also reported that Chafey may resign.
Vocero, which cited unnamed government officials, said Treasury Subsecretary Karolee García would become Interim Secretary of the Treasury.
The GDB oversees all debt issuance by Puerto Rico government entities and public corporations. Chafey has been the chairman since Alejandro García Padilla became governor in January 2013.
In response to a question about the Vocero story Tuesday, García Padilla said at a press conference, “As I’ve said before, all heads of cabinets are under continuous evaluation and that includes the Secretary of the Treasury; it is a continuous assessment as to what part they should play in the government.”
According to Vocero, García Padilla won't announce a shift in Acosta Febo's role until a court reaches a decision in Doral Bank's case against the Treasury. This is expected next week, Vocero reported. Doral, claiming it overpaid taxes is seeking $229 million from the Treasury.
Vocero reported that the Director of the Office of Management and Budget Carlos Rivas may leave his position, though perhaps not as soon as the other personnel changes are made.
Donahue said his source indicated that Chafey's resignation might trigger the shift of Acosta Febo. Donahue said among the reasons for his departure might be that the job has been demanding for Chafey and he has other options.
The position of chairman of the GDB is more powerful and significant than that of president, Donahue said. Chafey has been working on negotiating the PREPA forbearance agreement with the forbearing bond holders.
A shift in the GDB's leadership at this time would be of concern, Donahue said, because the government is working on selling a $900 million tax and revenue anticipation note, making changes at the Highways and Transportation Authority, creating a major tax reform, and restructuring the Puerto Rico Electric Power Authority. The fact that Acosta Febo has been privy to all these developments would alleviate some of the concern, he said.
Acosta Febo taking the role of GDB president would be surprising, Donahue said. Since she would answer to the GDB chairman and not directly to the governor, this would be in some ways a demotion; it is possible she will become the new GDB chair person, he said.
According to Vocero, Acosta Febo is the highest paid official in Puerto Rico's cabinet, earning $180,000 annually.
