Puerto Rico Debt Crisis: Gov. Alejandro Garcia Padilla Reveals Struggles in 'Inherited' Economic Talks
Puerto Rico's economic recovery working group released its comprehensive plan to save the commonwealth. The Working Group for the Fiscal and Economic Recovery of Puerto Rico published the Fiscal and Economic Growth Plan (FEGP), which include proposals for economic growth with reform measures.
The working group was blunt from the start, acknowledging the recommendations calls for "serious discussions" concerning its debt restructuring and urged all stakeholders to collaborate with the island's officials. According to the working group, Puerto Rico's General Fund and Government Development Bank (GDB) will exhaust its respective liquidity by the end of this year despite existing reforms aimed at reducing expenses and increasing revenues.
The working group called for the creation of a "control board" that should include local and outside experts, in addition to new budgetary regulations.
During an address to the commonwealth, Puerto Rico Gov. Alejandro Garcia Padilla said the fiscal and economic crisis was "inherited" public debt based on decisions made in the past. Garcia Padilla said he called for members of his administration, leaders of the political opposition and sectors in civil society to collaborate on a five-year fiscal and economic plan, but some people withdrew from the discussions.
In regards to the FEGP, the governor said the plan is the product of two months of discussions, which focuses on competition, public spending cuts, revenue and without firing employees.
"Now, the key finding of this plan is that even if we implemented all the measures contained in it, they wouldn't be enough to achieve the necessary balance. The massive public debt of Puerto Rico is an impediment to growth. It is time for the creditors to come to the table and share the burden of the sacrifices," said Garcia Padilla, based on remarks sent to Latin Post, calling for the reform plans as a "roadmap."
Garcia Padilla announced he appointed a team to talk to creditors and negotiate terms for the island to sustain economic growth. He will also send legislation creating the fiscal control board as mentioned in the working group's report.
Garcia Padilla reiterated the call for Washington, D.C., to take a role in the crisis.
"They have to hear the call that Puerto Ricans need to receive fair allocations of Medicaid and Medicare, that the decision of the IRS regarding contributions paid by foreign companies under Act 154 becomes permanent, and that we must have a legal framework to meet the Commonwealth's obligations in an orderly manner," the governor said.
Puerto Rico's debt grew more than $70 billion.
From Washington, D.C., elected officials have attempted to intervene and help Puerto Rico's struggles. In the House of Representatives, Resident Commissioner Pedro Pierluisi, Puerto Rico's non-voting congressman, introduced H.R. 970, which would grant the island the same bankruptcy law benefits as U.S. states. The Senate also introduced a complementary bill, S. 1774. The two bills have yet to be debated.
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