In a fiscal plan that Puerto Rico Gov. Ricardo Rosselló submitted to the Oversight Board, he suggests his government could pay from 8.1% to 14.1% of debt due through fiscal year 2023.

This would be an improvement over his proposal in late January, which allowed for zero debt service through fiscal 2022.

Puerto Rico Gov. Ricardo Rosselló
Puerto Rico Gov. Ricardo Rosselló said federal aid has made a major difference to his fiscal plan.

In a press statement on Tuesday the governor emphasized that the U.S. Congress aid package for Puerto Rico, approved in the aftermath of Hurricane Maria, substantially changed his fiscal plan.

In the new fiscal plan the governor projects cash deficits of $36 million in fiscal 2018 and $634 million in fiscal 2019. It projects cash surpluses of $354 million in fiscal 2020, $1.034 billion in fiscal 2021, $1.072 billion in fiscal 2022, and $1.057 billion in fiscal 2023. These figures combine to $2.847 billion net cash flow available.

The figure comes in a section on debt. Based on what the March, 2017 approved fiscal plan said was due for debt service in fiscal 2018 to fiscal 2023 by entities in the Commonwealth fiscal plan ($20.2 billion), that means 14.1% could be paid.

Alternately, the plan uses four approaches to compare Puerto Rico’s debt holding to that of the states with the 10 biggest debt loads. It says that an average of this approach would suggest that Puerto Rico should have capacity for outstanding debt of $8.9 billion from fiscal 2018 to fiscal 2023.

Assuming a cap is placed on annual debt service at about $650 million per year, the government would pay about 8.1% of debt due during the period.

It remains to be seen if Puerto Rico will use some of the debt service to pay off a federal Community Disaster Loan before paying off any bond debt.

How the plan is treats non-recurring expenses is unclear, so it is ambiguous as to whether the available debt service is $3.4 billion or $2.8 billion. If the larger figure is used, then Puerto Rico could pay 16.8% of debt service through fiscal 2023. Puerto Rico’s Fiscal Agency and Financial Advisory Authority didn’t immediately respond to a request for elaboration.

The plan doesn’t fulfill the Puerto Rico Oversight Board's directives. On Jan. 5 the board asked for more information on the assumptions underlying the macroeconomic projections and the projected costs of pension liabilities. These were not provided.

The board asked for debt capacity amounts for each year in the next 30 years. The revised plan only gives ranges for each year and averages for groups of years.

The board asked that $400 million a year be set aside for capital spending and there is no indication of this in the plan.

The board said that any tax reform must be revenue neutral or positive. Instead the plan anticipates its proposed reform would lead to more than $700 million a fiscal year in losses starting in fiscal 2020.

The plan also fails to make cuts to pension benefits demanded by tghe board.

Finally, the plan makes no mention of the board's proposals to make optional private sector severance payments and Christmas bonuses optional.

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