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  HOME | Caribbean

Puerto Rico Criticizes House GOP Debt-Restructuring Plan

SAN JUAN – Puerto Rico’s governor on Friday criticized a plan by Republicans in the U.S. House of Representatives that could lead to some restructuring of the U.S. commonwealth’s massive debt burden but would not give his administration any role in overseeing the process.

Alejandro Garcia Padilla commented after The New York Times reported that a draft House Natural Resources Committee bill, which is expected to be publicly released on Tuesday, would create a five-person oversight board “designed to audit the territory’s government and create new fiscal plans and budget measures..”

The daily said Friday that the bill “would not give Puerto Rico the broad bankruptcy authority it has asked for,” but it would “allow the oversight board to decide whether debt restructuring” is needed “in some areas.”

In a proposal unveiled in October, the Obama administration urged Congress to “move swiftly to pass pending legislation that provides Chapter 9 protection to Puerto Rican municipalities.”

The House’s draft bill, according to media in the United States, appears to be an alternate solution that does not change U.S. law, which bars American states and territories (and local governments in U.S. territories) from seeking protection in federal bankruptcy court.

Responding to the media reports, Garcia Padilla said in a statement Friday that an oversight board was necessary to oversee the restructuring of the island’s hefty $72 billion public debt load, which he has said is unpayable, but that that body “cannot usurp (local) democracy.”

“A board not elected by the people and with the power, for example, to impose taxes or lay off employees is not acceptable to me and wouldn’t be to any Puerto Rican. Any legislative measure must be evaluated on its merits to guarantee that Puerto Rico can restructure its debt without killing Puerto Rican democracy,” he added.

The secretary-general of the small Puerto Rican Independence Party, for his part, said the House GOP bill should be rejected by all people on the island, which has been mired in a recession for a decade and experienced a large increase in migration to the mainland United States in recent years.

“This is a board that will take the necessary measures to guarantee the wishes of creditors, as opposed to the needs of Puerto Ricans,” Juan Dalmau said.

 

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