Puerto Rico’s Oversight Board sent a letter to Puerto Rico’s leaders warning of what the board described as a waning resolve to deal with a dire financial situation.
Responding to news reports that the board believed were too optimistic about the government's financial situation, Board Chairman José Carrión III said Puerto Rico needs to create implementation plans for reducing government spending and assuring adequate liquidity at all times. The letter came on Friday as the legislature worked to hammer out details of a balanced fiscal 2018 budget, in compliance with a board-approved 10-year fiscal plan.
“I write to you out of a concern that some of the progress we appeared to have made in the past few weeks as a result of the close and positive collaboration between the board and the administration – and their respective teams of advisors – may be receding and that the necessary resolve to attain the goals set forth in the certified fiscal plan may be waning,” he said in the letter.
“It is equally of concern that some of the narrative taking hold in the public discourse fails to characterize adequately the truly dire fiscal situation the commonwealth is facing,” Carrión continued, addressing Puerto Rico Gov. Ricardo Rosselló, Senate President Thomas Rivera Schatz, and House of Representatives Speaker Carlos Méndez Núñez.
There is an incorrect “narrative” that says that if the government generates $200 million in additional cash reserves by June 30, the board won’t require a government furlough program and reduction or elimination of the Christmas bonus, he wrote.
To avoid these measures, the board is requiring a spending-reduction implementation plan in addition to the cash reserve that will assure government liquidity, Carrión wrote. If the plan is inadequate or poorly executed, “Puerto Rico is all but certain to run out of money to fund the central government’s payroll come November or December of this year.”
The board also called on Rosselló to explain which services are essential.
“Now we are at a critical juncture that requires that we collectively strengthen … resolve.”
Later on Friday Rosselló's non-voting representative to the board Elías Sánchez Sifonte released a statement responding to Carrión's letter. "This administration has demonstrated an unwavering commitment to face this inherited crisis with the seriousness it deserves," he wrote.
At meetings with the board, "we have also been demonstrating implementation plans to ensure we provide resources to cover essential services as required by PROMESA and in accordance with our Certified Tax Plan."
This week the Puerto Rico legislature has been considering the budget Rosselló worked out with the board. Though the board had originally directed the government to approve a budget by June 19, the Puerto Rico Senate plans to work on it June 22, so this would be the earliest it could be approved.