Puerto Rico board extends key deadlines on turnaround plan

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By Nick Brown

<span class="articleLocation”>Puerto Rico’s federal oversight board voted on
Saturday to give the debt-laden U.S. territory more time to
submit a fiscal turnaround plan and to restructure $70 billion
in debt without fear of lawsuits.

The seven-member board voted at a public hearing in Fajardo,
Puerto Rico, to extend to May 1 from Feb. 15 a so-called stay on
litigation over missed debt payments, which was part of the
federal Puerto Rico rescue law known as PROMESA passed last
year.

The board also voted to extend to Feb. 28 from Jan. 31 the
deadline for new Governor Ricardo Rossello to submit a fiscal
blueprint for the U.S. territory’s return to economic stability,
which the board must approve.

Puerto Rico, mired in an economic crisis, is trying to
restructure government debt at many public agencies. Under
PROMESA, creditor negotiations can be held out of court or
through a legal process akin to U.S. bankruptcy.

The island’s projected liquidity gap grew to $2.3 billion by
the end of the fiscal year, from $2.18 billion in a November
projection, according to government advisers from Conway
MacKenzie.

The higher figure owes to a projected increase in tax
refunds and to contingencies set aside for uncertainties that
might require big expenditures such as the precarious state of
Puerto Rico’s public pensions.

With almost no money and some $46 billion in liabilities,
the pensions could shift to a pay-as-you-go system this fiscal
year. That could cost the government $950 million to $1 billion
a year, said Mauricio Sanchez, a managing director at Conway.

Projections were just as bleak for the island’s Medicare
system, which is on the verge of insolvency, due in large part
to federal reimbursement levels lower than those for U.S.
states.

While the island is lobbying Congress to increase the
funding, the oversight board has called on Puerto Rico to
prepare for the worst and find a way to save 28 percent annually
in healthcare spending.

That would mean reductions in services and increased share
of costs for patients, board member Ana Matosantos said at the
meeting, on an island where 45 percent already live in poverty
and unemployment is more than double the U.S. average.

The board announced on Saturday it hired Citigroup Global
Markets as its financial adviser, and Ramon Ruiz-Comas as
interim executive director.

Ruiz-Comas, the former chief executive officer of San
Juan-based Triple S Management Corp, will serve until the board
selects a permanent executive director.



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