Puerto Rico’s government plans to expand its ability to issue its sales tax-backed COFINA bonds.

The government expects to introduce a bill to increase the sales and use tax percentage allocated to COFINA to 3.5% from 2.75%, the government announced. Increased revenues for the bonds will increase the government’s ability to issue them, the Treasury Department and Government Development Bank of Puerto Rico said in a press release.

“We want to use our most cost-effective financing tool to facilitate the general fund’s ability to continue meeting its budget obligations and to finance this administration’s new infrastructure projects,” Treasury Secretary Melba Acosta Febo said.

In recent years Puerto Rico has been required to pay lower interest rates on its COFINA bonds compared to its other bond types. Savings from using the COFINA bonds are estimated at $66 to $132 million for every $1 billion issued in bonds. “Using COFINA will not have an impact on the general fund, because sales tax receipts allocated to COFINA will be offset by an equivalent reduction in the debt service payable to the general fund,” said GDB president José Pagán Beauchamp.

Puerto Rico will issue between $500 million and $1.2 billion in aggregate bonds, including COFINA, in the rest of the calendar year, Pagán Beauchamp said.

“This should have no immediate impact on outstanding bond ratings for Commonwealth [of Puerto Rico] debt, but should allow for some liquidity cushion that has been a recent concern,” said H.J. Sims’ director of credit analysis Richard Larkin.

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