On Saturday the “control” board created by the U.S. Congress to manage Puerto Rico’s $70 billion debt crisis will meet in Fajardo, Puerto Rico amidst ongoing concerns about the anti-democratic nature of the debt restructuring plans.
Saturday’s public meeting, which will be live streamed through the board’s website, is the first since the election of right-wing governor Ricardo Rosselló and is expected to formally approve Rossello’s request for an extension until March to present a 10-year plan for debt payments.
Rossello’s government has signaled a much greater willingness to bend to the will of bond-holders given his recent signing of the Puerto Rico Financial Emergency and Fiscal Responsibility Act, which says it "is inappropriate to categorically prioritize the payment of non-debt expenditures over debt service.
Rossello’s prioritizing of debt payments is in stark contrast to former Governor Alejandro García Padilla’s refusal to submit a debt repayment plan and his claim that an April 2016 Moratorium Act gave Puerto Rico the right to cancel parts of its debt.
Just last week Rosello, who was sworn in on Jan. 2 of this year, dissolved a parliamentary commission tasked with auditing the debt after it reported that much of the debt— held by various so-called “vulture funds”— is likely illegal.
Opposition members have said Rosello’s moves are anti-democratic given that the commission was established by the legislature, and have also raised concerns that he is trying to negotiate the crisis in secret.
William Fallon, president of one of the main insurance companies which looks to make billions from Puerto Rico’s debt crisis, told Bloomberg on Friday that he was “encouraged” that Rossello will “respect the priorities” of the debt holders.
This is in stark contrast to those who are calling on the oversight board to arrange for significant debt relief, noting that the board itself determined in November that even with brutal austerity measure, the U.S. colony only has the capacity to pay 20 percent of its debt over the next 10 years.
"The board recognizes that Puerto Rico needs significant debt relief to rebuild its economy," said Eric LeCompte, executive director of the development organization Jubilee USA, during testimony before the board in November. “If negotiations with creditors fail to achieve a significant debt reduction, the board needs to authorize the court arbitrated bankruptcy process."
While many U.S. municipalities have the legal right to declare bankruptcy— which allows for the protection of core services and public assets— Puerto Rico’s colonial status denies it the same option.
Empire Files: Puerto Rico's Debt to its Oppressors