The governor of Puerto Rico announced on Tuesday that a federal control board had reached a major deal that would reduce the overall debt of the US territory by about 80 percent, but that his administration is rejecting it because it has to do with the island. The creaking public pension system will need to be cut.
The deadlock between the governor and a board that oversees Puerto Rico’s finances threatens to throw in a limited effort to end a bankruptcy-like process for a government that more than $ 70 billion six years ago Public debt was declared unacceptable.
The deal was done with creditors who hold Puerto Rico’s government-sold general obligation bonds and public building authority bonds and will resolve $ 35 billion in debt and non-debt claims, according to the board. It would reduce the debt held by those creditors from $ 18.8 billion to $ 7.4 billion, a 61 percent reduction, and provide $ 7.4 billion and $ 7 billion in bonds, among other things.
The board said the deal would be more than $ 300 million per year for government services, and that instead of 30 cents for every dollar in taxes and fees that Puerto Rico’s government collects creditors, it was less than 8 cents Will happen.
“I believe this is the best outcome in today’s economic uncertainty, which is not only for the people of Puerto Rico, but also for creditors who are interested in the long-term viability and credibility of Puerto Rico,” board David Skill he said.
However, Pedro Peralucci disagrees.
He said in a statement that although the agreement is positive for Puerto Rico in many ways, his administration does not withdraw the deal that is to be presented in court next month and the final call from a federal judge overseeing the bankruptcy-like process Clearance required.
“The plan of adjustment should not be structured in a way that affects our pensioners even more,” he said.
Peralucci said finalizing the reorganization of a portion of Puerto Rico’s debt is a priority for his administration, but not at the expense of retirees: “Bringing the bankruptcy process behind us is a step towards recovery and economic growth of our island.” Basic step. “
Puerto Rico amassed debt to balance the budget after budgeting, corruption and excessive borrowing. A former governor declared it unacceptable in 2015 and then two years later, the government filed for the largest US municipal bankruptcy in history.
Authorities are now restructuring a portion of that debt amid the nearly 15-year economic crisis that deepened after Hurricane Maria, the tremors of a strong earthquake a year earlier and the ongoing epidemic.
The creditor groups involved in the deal hold bonds worth more than $ 11 billion. Those holding more than $ 8 billion of those bonds said they worked with the board in good faith to provide Puerto Rico with the financial flexibility to overcome the epidemic.
“This widely supported settlement will help reduce Puerto Rico’s years of spending, distract litigation, and ultimately the long-awaited exit of the island,” he said in a statement.
The board said arbitration is continuing with creditors who hold other types of bonds, including those with employee retirement systems.
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