Puerto Rico Governor Alejandro García Padilla submitted a fiscal plan to the new Puerto Rico Financial Oversight and Management Board when it met in New York October 14th. Congressional legislation passed in June created the board and requires the Governor to submit a fiscal plan to the board for approval. Congress passed the legislation to address Puerto Rico's $70 billion debt crisis.
"Puerto Rico's fiscal plan needs to protect the vulnerable, promote economic growth and prevent further austerity," commented Eric LeCompte, Executive Director of the religious development coalition Jubilee USA. LeCompte testified before Congress in February on resolving Puerto Rico's crisis. "The most important issue facing the board is restructuring Puerto Rico's debt to sustainable levels."
In addition to approving the Governor's fiscal plan, the oversight board has the power to initiate a debt restructuring process for Puerto Rico. Puerto Rico avoided a large-scale July 1 default when President Obama signed the debt crisis legislation June 29th. The legislation placed a temporary hold on debt lawsuits against the island, a provision some investors are challenging in court.
The Governor is expected to prioritize public services and pensions in his plan. Puerto Rico's poverty rate is over 40% and nearly 60% of Puerto Rico's children live in homes that receive government assistance. Over 10% of the island's population has left in the past decade. Puerto Ricans are US citizens and can leave the island for the US mainland without participating in any immigration process.
"Austerity in fiscal plans will only make a bad situation worse," said LeCompte who is serving on a task force of independent experts that is reviewing the oversight board's actions.
Read more about the Puerto Rico economic oversight board
Read more about the Puerto Rico debt crisis legislation that created the oversight board
Read more about the task force monitoring the Puerto Rico oversight board
Read a timeline of Puerto Rico's debt crisis