FULL STORY: Control Board announces guidelines; governor says he won’t follow them

by Gil Hall, gil@prnewsroundup.com

Date published: 20161122 094736

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.

In the course of the five-and-a-half hour meeting held Friday at the Conquistador Resort in Fajardo, PR the Board delved into the crisis’s origins, discussed metrics to evaluate its current and future states, and looked to possible solutions.

Testimony was heard first from experts hired by the Puerto Rican government to provide an analysis of the ELA’s liquidity (Conway Mackenzie), then from a broad swath of stakeholders, including: the executive director of a faith-focused economic think tank (Jubilee), an executive representing some of the island’s bondholders (Bonistas del Patio), and a student and former board member at the University of Puerto.

Board president José Carrión said that some of the stakeholder groups most critical of the Board’s existence and its actions—such as labor unions—were invited to participate in the meeting, but declined.

The Board made public two major policy decisions:

  1. the Board provided the criteria it will use to judge the Fiscal and Economic Growth Plan (FEGP) the PR government must present to the Board per PROMESA. The new requirements declare that the PR government may use in its forecast models only federal funds currently available, and that a “bail-in”  of the debt payments as a means to generate liquidity was not acceptable. Substantial additional federal funding and a long-term debt moritorium were central parts of the Alejandro García Padilla administration’s FEGP that it had updated only days prior to the meeting.
  2. the Board verbally provided guidelines for the process “covered entities” must follow to receive Board approval on significant financial or policy transactions.

Governor Alejandro García Padilla’s response to the Board’s announcements was swift: over the weekend he declared that his administration would not re-work its FEGP to include what he regards as more austerity measures.

Governor-elect Ricardo “Ricky” Roselló has said he will cooperate fully with the Board, though prominent legislative leadership from his own PNP party have insinuated they will not do so.

When the new legislature and the governor are sworn in in early January 2017, the parties controlling the legislative and executive branches will swap: the PPD that currently holds the House, Senate, and Governorship will cede all three to the PNP.

It’s unclear how the Board can proceed without the elected leadership’s cooperation. Though it has the clear legal ability to intervene, the practicalities of doing so would be daunting and would almost certainly cause major delays.

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Recommended Citation: Gil Hall (PRNewsRoundup.com), “Control Board announces guidelines; governor says he won’t follow them” http://prnewsroundup.com/2016/11/22/control-board-an…wont-follow-them/

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.