OPINION:
The Washington Times editors recently wrote that Puerto Rico’s creditors need to know the depth of the fiscal hole into which the island has dug itself (“It’s time to audit Puerto Rico for real,” Web, Feb. 27). We, the Financial Oversight and Management Board for Puerto Rico, know the answer.
In August 2018, we presented a 600-plus-page investigative report about the debt and the factors that contributed to Puerto Rico’s fiscal crisis. It was the result of an independent investigation by Kobre & Kim LLC. It investigated Puerto Rico’s $74-billion debt and approximately $50 billion in pension liabilities piled up by more than 90 entities, including the commonwealth’s government and its instrumentalities, going back to 2006. The independent investigator reviewed approximately 260,800 documents and interviewed 120 witnesses, including former and current senior government officers, underwriters, rating agencies, and outside professionals and advisers. It identified potential recoveries.
It is available to the public on our website, and we encourage everyone to read it.
Why would we duplicate the work Kobre & Kim did with yet another audit that would takes years to complete and cost millions of taxpayer dollars — only to find out what we already know? What Puerto Rico needs is to get out of bankruptcy so it can build a foundation for economic growth and prosperity.
The board has reached agreements or completed restructurings that would reduce Puerto Rico’s debt to $38 billion. These include a plan of adjustment, filed last week, that would reduce $35 billion in Puerto Rico’s central government debt alone to $11 billion. The plan is supported by almost 60 percent of bondholders despite meaningful reductions of the value of their claims. The plan also includes a debt-management policy to ensure that Puerto Rico’s history of irresponsible borrowing will not repeat itself. But among the most important of the policy’s elements is that new debt may only be used to finance capital improvements, not operating deficits — and refinancing debt is only permitted if it saves Puerto Rico money.
Not only is remaining in bankruptcy costly to the economy now, but without access to capital markets in the future, Puerto Rico’s ability to invest in infrastructure is limited. It is paramount that we turn the corner from this crisis as soon as reasonably possible.
NATALIE JARESKO
Executive director
Financial Oversight and Management Board for Puerto Rico
San Juan, Puerto Rico
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