His­toric takeover of Puerto Rico f inances be­gins

Jamaica Gleaner - - BUSINESS -

AFEDERAL con­trol board on Fri­day took over Puerto Rico’s fi­nances and sev­eral gov­ern­ment agen­cies for the first time in the United States ter­ri­tory’s his­tory in a bid to haul the is­land out of an acute eco­nomic cri­sis.

The seven-mem­ber board met in New York and was briefly in­ter­rupted by pro­test­ers who yelled, “This is slav­ery!” and “Stop pil­lag­ing Puerto Rico!”

The meet­ing was livestreamed over the In­ter­net fol­low­ing pledges that the board would op­er­ate with trans­parency.

It or­dered Gov­er­nor Ale­jan­dro Gar­cia Padilla to pro­duce a fis­cal plan in two weeks and sub­mit weekly and monthly rev­enue re­ports that de­tail how the gov­ern­ment is ad­her­ing to its bud­get.

Mem­bers also voted on which Puerto Rico gov­ern­ment agen­cies would come un­der the board’s over­sight. They in­clude the is­land’s cen­tral gov­ern­ment, its largest pub­lic univer­sity, its heav­ily in­debted util­ity com­pa­nies, a Gov­ern­ment De­vel­op­ment Bank that is run­ning out of cash and a pub­lic pen­sion sys­tem un­der­funded by more than $40 bil­lion.

WORK­ING QUICKLY

“We’re work­ing as quickly as pos­si­ble,” said José Car­rion III, who was elected board pres­i­dent, to re­porters af­ter the meet­ing.

The board was ap­proved by Congress in June and is charged in part with help­ing re­struc­ture a por­tion of a nearly US$70 bil­lion pub­lic debt that Gar­cia has said is un­payable. Car­rion is one of four Repub­li­cans on the board, along with three Democrats. Also on the board is a rep­re­sen­ta­tive of Puerto Rico’s gov­er­nor, who is barred from vot­ing.

Puerto Rico econ­o­mist Gus­tavo Velez said the board will likely soon seek help from the cap­i­tal mar­kets to gen­er­ate rev­enue.

“If it doesn’t, then it will have to im­pose se­vere aus­ter­ity mea­sures,” he said. “There is no other way to fi­nance the deficit. The gov­ern­ment likely will not be able to pay salaries very soon. We’re in a down­ward spi­ral.” Gov­er­nor of Puerto Rico, Ale­jan­dro Gar­cia Padilla.

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