WASHINGTON – The Financial Oversight and Management Board for Puerto Rico has told two senators that it fully followed PROMESA provisions in approving Gov. Ricardo Rosselló's fiscal plan for Puerto Rico and is supportive of commonwealth officials' negotiating with creditors over debt payments,
Sens. Thom Tillis, R-N.C., and Tom Cotton, R-Ark., recently wrote a letter to Puerto Rico’s FOMB, expressing creditors' concerns about the fiscal plan and negotiations. They asked for a complete report on how the board has been complying with PROMESA.
The board responded to the senators on Tuesday, providing details to assure them that Rosselló’s fiscal plan, which was approved in March, met PROMESA standards and that they were following the law. The board said it intends to maximize returns to creditors, but warned that creditors are wrongly insisting that “the pie is larger than FOMB’s economists and consultants believe it to be.” The fiscal plan already “cuts expenses to the maximum” and further cuts would be detrimental to the commonwealth, the board added.
The FOMB additionally addressed the senators’ concern about a lack of interest from the board or administration in negotiating with the creditors, saying it has had more than 30 meetings with creditor representatives between December 2016 and March 2017 and that it is prioritizing consensual debt agreements over legal action. It added that it would be happy to arrange meetings with the senators and their staffs to further discuss any concerns.
Speaking at an event here on Wednesday sponsored by the Heritage Foundation, Rosselló said a main focus of his government is the ongoing negotiations with creditors. He said he and his administration have been sitting down with creditors since taking office, viewing the negotiations as “critical pieces of Puerto Rico finding its way forward.”
Rosselló urged the U.S. government to help with healthcare funding and a Puerto Rico vote on statehood. He gave both a history of his accomplishments since taking office and his future plans to try to right the beleagured commonwealth.
Puerto Rico is currently struggling with roughly $70 billion of debt and nearly $50 billion in unfunded pension liabilities. Rosselló said he has tried to address the fiscal crisis by looking at ways to trim spending across-the-board and reduce inefficiencies such as an oversized government and lack of transparency.
Rosselló also said he is focused on working with the private sector to try to help with fiscal stability and boost the economy, including focusing on the use of public-private partnerships where applicable.
“I see a wide opportunity in Puerto Rico for P3s on the infrastructure side [as well as] for P3s on the services side,” Rosselló said. “If there is a service you can find in the yellow pages, you should really question if the government should be giving it.”
He made an effort to distance himself from the previous governor’s administration when he described the help he wants from the federal government.
“Before, the idea was to spend away, to borrow, and come to Washington to get a bailout,” Rosselló said about the island’s past leadership. “Our narrative is different. Our narrative is we’re going to put controls [in place], work with a solid plan, and [we] don’t want bailouts.”
He added that his administration still needs “collaboration from the federal government so we can have a runway to execute many of the policies and [deal with] many of the challenges that we have in Puerto Rico.”
One challenge is on the healthcare front, he said, as the commonwealth, which already receives lower reimbursement rates for Medicaid than U.S. states, is facing the possibility of running out of federal funding by the end of the year. Rosselló said it is essential for the federal government to renew the grant that provides that funding. Renewed funding would give Puerto Rico the opportunity to reduce healthcare spending and that will lead to greater fiscal stability, according to Rosselló.
He added that he recently met with Secretary of Health and Human Services Tom Price about the problem.
“We’re not coming to Washington to ask for money just because we need a little bit extra,” Rosselló said. “This capital is the difference between us having a system that can work and get to the next year or hav[ing] a system that will collapse.”
The possibility of a vote in Puerto Rico on statehood also puts the commonwealth at a “critical juncture in our history,” Rosselló said. He asked that the federal government allow Puerto Rico to have the ability to hold the vote and have it respected.
Puerto Rico is currently working with the Department of Justice to finalize language for the ultimate vote, which will allow Puerto Ricans to choose either statehood, nationhood, or a continuation of the commonwealth status, he said.