FULL STORY: Big take-aways from Control Board’s November 18, 2016 meeting

by Gil Hall, gil@prnewsroundup.com

Posted: 20161121 084526

The bulk of the marathon third meeting of the eight-member Control Board tasked by Congress to supervise Puerto Rico’s finances for the foreseeable future was testimony from stakeholders, though there were also major policy announcements made.

Audio for the meeting is here. <br> Index of the audio with link to specific clips is here

The big take-aways were:

1. The PR government’s liquidity is bad and likely to get worse.

2. The Board is unanimous that big, difficult choices must be made.

3. The Board wants the PR Legislature to participate in the process, to make the “best” hard decisions … but the Board will presumably intervene in law and policy if PR executive and legislative leaders refuse to participate, or obstruct.

Carrion to Secretary of State Víctor Suarez: “Board would like to comment & will trust all actions will be in compliance with PROMESA.”

4. A ten-year Fiscal and Economic Growth Plan (FEGP) will be required

  •  FEGP Must be based on current funding levels and minimal economic growth. Federal funding is unlikely to change much; no federal rescue packages can be anticipated.
  • Plan must show significant progress by year five.
  • Cannot be (substantially) based on tax gimmicks
  • Board has aggressive timeline for FEGP; it must be ready by end of January 2017.
  • Current version of FEGP made by Alejandro García Padilla administration is unrealistic, both from financial and economic growth perspectives. Upside too high, downside too low.
  • UPDATE 11-21-16: Governor Alejandro García Padilla has said he will NOT submit a revised plan

5. The Board established process via which it will review major transactions of covered entities.

6. There exists consensus amongst board members as to order of operations set forth in PROMESA & there is agreement that these must be done quickly

  1. Establish FEGP by end of January 2017 THEN
  2. Negotiate with creditors THEN
  3. Adjust debt that can’t be negotiated.  Several Board members  envision that substantial debt haircuts will occur. Consensus is that bondholder groups expect some degree of haircut.

7. The “location” and amounts of clawback and moratorium funds was revealed

8. The Board provided a summary of the debt that is being paid and a list of the debt that is not being paid

9. Business and community leaders offer (not-so-new) ideas of how to grow the economy.

10. The PR healthcare system is in jeopardy and needs urgent attention.

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Recommended Citation: Gil Hall (PRNewsRoundup.com), “Big take-aways from Control Board’s November 18, 2016 meeting” http://wp.me/p6SnSr-jl

About Gil Hall

Currently writing book on PR crises. Working title: "Los Pertrechos: the Story of an Economy". Polyglot prone to prolixity in English, German &, Spanish. Based between San Juan and North Carolina. MBA/MHA.