Two days after the Federal Emergency Management Agency delayed a loan to Puerto Rico because it said the commonwealth had enough money, the Oversight Board will hold a hearing on the island government’s liquidity.

The board will hold the hearing Friday morning in San Juan and stream the meeting on its web site,

Melba Acosta Febo, former Puerto Rico Puerto Rico Government Development Bank president, will be among those talking Friday about Puerto Rico's liquidity.

On Dec. 18 the board announced it would look into reports that Puerto Rico’s government held over $6 billion in its bank accounts. Friday’s hearing will look into “the sources and uses of the funds, as well as on the nature of their legal restrictions,” according to the board.

Howard Cure, director of municipal bond research at Evercore Wealth Management, said the board’s meeting is potentially valuable. “The greater the comfort by the financial community and federal regulators about available liquidity, the easier it would become to negotiate aid packages and financial forecasts.”

The commonwealth’s lack of financial transparency has confounded bondholders, Cure said.

Puerto Rico has defaulted on most of more than $50 billion of debt and its economy has contracted in 10 of the last 11 years. Its fiscal year started July 1. Hurricane Irma hit Sept. 6 and Maria hit Sept. 20, casting further doubt on its ability to repay bondholders.

On Wednesday FEMA said it would not disburse a Community Disaster Loan to Puerto Rico because the government’s cash balance was too high to warrant the loan right now. FEMA said it would look into extending loans to the Puerto Rico Electric Power Authority and the Puerto Rico Aqueduct and Sewer Authority this month because they otherwise may run out of money.

FEMA said it may release a loan to the central government if its cash position worsens.

On Friday the Oversight Board will first hear from a panel of financial leaders in the administration of Gov. Ricardo Rosselló. Among them will be Gerardo Portela Franco, executive director of the Fiscal Agency and Financial Advisory Authority; Treasury Secretary Raúl Maldonado Gautier; and Jose Marrero Rosado, director of the Office of Management and Budget.

Subsequently the board will ask questions of a second panel of leaders from the administration of prior Gov. Alejandro García Padilla. They include Melba Acosta Febo, former Treasury secretary and Government Development Bank president; Luis Cruz Batista, former OMB executive director; and Juan Zaragoza Gómez, former Treasury secretary.

“It is essential that we continue to work to improve the transparency and accountability of Puerto Rico’s public finances to put the commonwealth on the road to economic recovery, regain access to the capital markets and restructure our immense debt,” board Chairman José Carrión said Wednesday, in a discussion of the board’s liquidity meeting.

On Thursday morning the commonwealth government posted a cash flow report for its primary government account, the Treasury Single Account, effective Jan. 5. It showed that inflows were down 13.7% compared to budget and outflows were down 13.5% compared to budget. The cash balance was $1.78 billion, down 1.1% from the budgeted projection for the date.

In early December Portelo Franco said he expected Puerto Rico government revenues to come in 25% short over the course of the fiscal year, which ends June 30. He said Hurricanes Irma and Maria were to blame for the shortfall.

According to the web site, as of Thursday 63.5% of Puerto Rico customers had public electricity service. Some without this service have been using generators to provide themselves electricity.

The lack of electricity and other factors connected to the hurricanes have led to a slowdown in the economy and thus declining government revenues, the government has said.

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