The Jubilee Blog

Congress, Protect Title III for Puerto Rico

By Natalia Kolbjornsen

Eric LeCompte, Jubilee USA's executive director, wrote a letter to Congress urging them to protect the debt restructuring process created by the Puerto Rico Oversight, Management and Economic Stability Act (Public Law No 114-187, “PROMESA”).

He has been deeply involved in negotiations, both to enact PROMESA last year, and to implement it. In this letter, LeCompte urges Congress to make sure that any Continuing Resolution or omnibus bill does not weaken Puerto Rico’s bankruptcy protection or existing Title III process. LeCompte and faith leaders on the island stressed the staggering percentage of children that are living in poverty and the need for a bankruptcy process to allow for economic growth and poverty alleviation.

Read Eric LeCompte’s letter to Congressional leadership

Join Eric and call your representatives to ask them to defend Puerto Rico's bankruptcy access

Puerto Rico Oversight Board Meets as Bankruptcy Deadline Approaches

By: Greg Williams

Puerto Rico's oversight board meets on April 28th in New York and could authorize a bankruptcy process for debt ridden island. On May 1st Puerto Rico's loses protections from debt lawsuits and authorizing bankruptcy or "Title III" this week would extend protections for the US territory.‎ Once the bankruptcy process is authorized, Puerto Rico can seek debt relief.

"The board must immediately vote for the bankruptcy process," stated Eric LeCompte, executive director of the religious development organization Jubilee USA. LeCompte worked on Puerto Rico debt legislation and testified before the board in November. "If they don't authorize the bankruptcy process predatory creditors could buy debt and endless litigation begins."

The child poverty rate on Puerto Rico is almost 60% and it faces a Medicaid funding gap of $650 million this year. Puerto Rico has a fiscal plan that includes austerity measures.

A statement released Tuesday by Archbishop Roberto González from the Catholic Archdiocese of San Juan de Puerto Rico and Reverend Heriberto Martínez, the head of the Puerto Rico Bible Society urges the oversight board to move the island into this bankruptcy process.

"We restate our encouragement and support for Puerto Rico's Governor and the oversight board to authorize the Title III bankruptcy process by April 28th before debt lawsuit protections expire," note Archbishop González and Reverend Martínez. "If the oversight board and Governor do not act by April 28th, we fear that Puerto Rico could be held hostage by predatory actors and 'vulture' funds."

Read the statement from Archbishop González and Reverend Martínez' in English, en español

 

Puerto Rico Religious Leaders Call for Bankruptcy Ahead of "Vulture Fund" Deadline

By Greg Williams

Before May, protections expire that shelter Puerto Rico from debt lawsuits and predatory financial groups popularly known as "vulture" funds. The Catholic Archbishop of San Juan and Puerto Rico's Bible Society head are calling on the island's governor and oversight board to immediately activate a bankruptcy process designed by Congress.

"We restate our encouragement and support for Puerto Rico's Governor and the oversight board to authorize the Title 3 bankruptcy process by April 28th before debt lawsuit protections expire." notes a statement released Tuesday by Archbishop Roberto González from the Catholic Archdiocese of San Juan de Puerto Rico and Reverend Heriberto Martínez, the head of the Puerto Rico Bible Society. "If the oversight board and Governor do not act by April 28th, we fear that Puerto Rico could be held hostage by predatory actors and 'vulture' funds."

Last summer, Puerto Rico emergency debt crisis legislation was passed by Congress. The legislation included temporary protections from debt lawsuits and a bankruptcy process designed to restructure all of the island's debt.

"The bankruptcy process designed by Congress is a very powerful tool. It is really the only process that has the ability to restructure every dollar of debt," explained Jubilee USA's executive director Eric LeCompte. LeCompte worked on the legislation and advises Puerto Rico's religious leaders. "Puerto Rico's time is almost up and it is the responsibility of the oversight board to now authorize the bankruptcy process."

In November, LeCompte testified to the oversight board and urged them to move forward the Title 3 bankruptcy process if debt negotiations fail. As the May deadline approaches, religious leaders on the island are warning that vulnerable communities can face more suffering if the oversight board and governor fail to act. The Catholic Archbishop and Evangelical leader have consistently raised the alarm on the crisis since the summer of 2015.

"New austerity programs are being forced on our people and we must now receive the debt relief we are promised. It is immoral and unethical for any person or group to attempt to deny our people access to promised debt relief processes," write González and Martínez in their statement. "We continue to hold in prayer everyone who is affected by this crisis whether they are our creditors or our children."

Read the statement from Archbishop González and Reverend Martínez' in English, en español

IMF and World Bank Meetings Begin Amid Concerns of Faltering Global Cooperation

By Greg Williams

Finance Ministers, heads of central banks and government delegations begin the official Spring International Monetary Fund (IMF) and World Bank meetings. ‎Earlier in the week the IMF released two bi-annual reports that raised concerns about global political shifts and possible rollbacks of financial transparency regulations.

"The meetings are overshadowed by concerns that some countries are pulling back from global cooperation and that financial transparency regulations are at risk of repeal," noted Eric LeCompte, who monitors the meetings and is the Executive Director of the religious development group Jubilee USA."I'm concerned because possible roll backs of transparency regulation and renewed debt crises are a recipe for another financial crisis."

LeCompte will moderate a panel during the meetings today called "African Debt Crisis 2.0‎." Countries such as Ghana and Mozambique face renewed crises and several African countries now face famine conditions.‎ Senior IMF and World Bank officials are speaking on the panel including the World Bank's ‎Lead Africa Region Economist, Punam Chuhan-Pole and the IMF's Africa Deputy Divi‎sion Chief, Laure Redifer. Academics and representatives of civil society including Reverend Aniedi Okure and Tirivangani Mutazu also will speak on the panel.

"It is a little ironic that we are so concerned about the repeal of basic transparency protections when we still haven't put in place proper global policies to prevent debt and financial crises," stated LeCompte, who serves on United Nation expert finance groups.‎ "Globally we are still falling short on transparency initiatives and responsible lending and borrowing policies."

Read more about Jubilee USA's panel African Debt Crisis 2.0

Read the April 2017 Global Financial Stability Report

Read International Monetary Fund's April 2017 World Economic Outlook report

Global Economic Risks Ahead Warns International Monetary Fund

By Greg Williams

The International Monetary Fund (IMF) released its bi-annual report on global economic stability, warning that the financial system could face serious risks in the year ahead. Ahead of the IMF/World Bank Spring Meetings in Washington, the Global Financial Stability Report calls for continued oversight in the financial sector.‎

"The IMF is concerned that some political shifts in wealthy countries could lead to a lack of cooperation in the financial system," noted Eric LeCompte who tracks the IMF reports and is the Executive Director of the religious development coalition Jubilee USA. "It's clear the IMF is concerned with roll backs of transparency regulations and how that will impact global financial stability."

The Global Financial Stability Report points out that rising instability in the developed world will raise risk premiums for developing countries, making public debt more expensive and reducing their ability to handle other external shocks.

"Everyone is becoming more concerned with unsustainable debts in both poor and wealthy countries," stated LeCompte who serves on United Nation finance expert groups.‎ "I'm concerned that high debt burdens and more risky market behavior will lead to another financial crisis."

Yesterday, the IMF released its bi-annual World Economic Outlook report, which also warned about global financial stability risks. The report predicts that global growth will continue at 3.5% through 2017‎. 

Read the April 2017 Global Financial Stability Report

Read International Monetary Fund's April 2017 World Economic Outlook report

IMF Warns of "Protectionism" and Risky Investing; Predicts Steady Growth & Calls for Cooperation on Taxation‎

By Greg Williams

The International Monetary Fund (IMF) released its bi-annual report on the state of the global economy, predicting that global growth will continue steadily but slowly. The report also raised the alarm on policies it labeled as "protectionism." The IMF expresses concern about the roll back of transparency regulations leading to a return of riskier global investing.

"‎While the IMF reports that growth is slow and steady, it is clear that the IMF is concerned with the return of the kind of risky behavior that helped create our recent global financial crisis," noted Eric LeCompte, the Executive Director of Jubilee USA and an expert on United Nation finance groups. LeCompte has tracked IMF economic reports since 2010. "The IMF is concerned with a shift in global politics."

The report also noted that curbing tax evasion and avoidance needs global or "multilateral" cooperation.

"We know that in order to curb tax avoidance and evasion, we need agreements that can cross the borders of countries," commented LeCompte on the taxation elements of the report.

The World Economic Outlook report noted that both low and middle income countries should be concerned about rising debt levels. The IMF views high debt as being a substantial risk in weak economies.

"It's good the IMF is pointing to concerns of sustainable debt levels in poor countries," stated LeCompte.‎ "I'm concerned that higher debt levels and more risky market behavior is a recipe for another financial crisis."

Read International Monetary Fund's April 2017 World Economic Outlook report

Puerto Rico Oversight Board Mediates Last Ditch Debt Negotiations; Archbishop Calls for Debt Cuts

By Greg Williams

Within weeks, Puerto Rico will likely enter bankruptcy proceedings tailored by Congress specifically for the US territory. The island's government and creditors are engaged in final talks to try and resolve the dispute before a May 1 deadline. An oversight board created by Congress to deal with Puerto Rico's debt crisis is mediating the current round of debt talks. If no agreement is reached, the oversight board will likely vote for bankruptcy proceedings to begin.‎‎

"Whether the crisis is resolved through negotiated deals or a bankruptcy process, solutions must promote economic growth and significantly cut the debt to sustainable levels," said Archbishop Roberto González from the Catholic Archdiocese of San Juan de Puerto Rico. "The debt has human costs and how we resolve the crisis can either lift people out of poverty or trap them in a perpetual cycle of poverty."

The island wrestles with a nearly 60 percent child poverty rate. Religious leaders like González actively called on Congress to include child poverty reduction measures in debt crisis legislation passed last year.

"‎The most important stake holders in any debt crisis resolution are Puerto Rico's children," said Reverend Heriberto Martínez, the head of the Puerto Rico Bible Society. "We need to be sure we are investing in our children and our children don't inherit the debt."

In the summer of 2015, when the island's government announced the debt was no longer payable, religious leaders across Puerto Rico ‎rallied to resolve the crisis. Working with US religious groups and the development organization Jubilee USA, the island's religious leaders proposed various solutions to aspects of the crisis. Now a comprehensive path to cut the debt appears in sight.

"When the oversight board votes for bankruptcy proceedings, Puerto Rico can access a comprehensive process to deal with all of their debt," noted the executive director of Jubilee USA, Eric LeCompte, who tracks the debt negotiations. LeCompte testified to Congress and the oversight board on the island's crisis. "Puerto Rico is lucky to have a process that can deal with 100% of the debt. Unfortunately it's too rare in the bankruptcy world to have comprehensive processes like this."

Puerto Rico and Bondholders Agree on Electric Company Debt Deal

By Greg Williams

Puerto Rico’s electric utility company (PREPA) and bondholders reached an agreement to restructure $8.9 billion in debt, according to an announcement from the island's government. The deal still needs approval from a "control" board Congress created as part of debt crisis legislation passed last year.

"The test for any debt deal is whether or not the debt is brought back to sustainable levels," noted Eric LeCompte, who tracks the debt negotiations and leads Jubilee USA, a religious development organization. "It's hard to judge success until all of the debt is brought back to sustainable levels, not just some of it."

Puerto Rico's government says this will save $1.5 billion in debt servicing costs over five years and expects the average electric bill to be reduced by $90 annually.

"Puerto Rico's government is making progress but the entire debt needs to be looked at comprehensively," said LeCompte, who testified to Congress on Puerto Rico's debt plan. "Puerto Rico won't see recovery, let alone economic growth, until the whole debt is restructured."

Representative Doggett and Senator Whitehouse Introduce Legislation to Close Tax Havens

Representative Lloyd Doggett (D-TX) and ‎Senator Sheldon Whitehouse (D-RI)‎ introduced versions of the Stop Tax Haven Abuse Act in the House and Senate. The legislation makes it more difficult for multinational corporations to avoid taxes by "offshoring." Doggett also introduced the Corporate Expatriates and Inverters Tax Fairness Act (Corporate EXIT Fairness Act). If passed, it would be more difficult for a corporation to shift its headquarters to a country that has a lower tax rate.

Eric LeCompte, Executive Director of Jubilee USA Network, a religious development organization, releases the following statement:

“Governments around the world need greater revenues to meet their budgets.‎ Congress needs to pass legislation that closes loopholes.

"This legislation helps shine a spotlight on the problem of tax havens.‎ It helps track where companies are paying or not paying taxes.

“Tax avoidance, evasion and corruption are too often thefts from the poor and we have a moral imperative to act.”

One Year Anniversary of Panama Papers Leak

By Greg Williams

More than 11 million documents were leaked from a law firm based in Panama a year ago today. The "Panama Papers" implicate various global figures and officials in possible acts of fraud and corruption.

"The Panama Papers reveal a secret network of shell companies and firms that can hide when government officials steal from their people,” noted Eric LeCompte, Executive Director of the religious development group Jubilee USA. “Congress can shine a spotlight on these activities. Congress needs to act.” 

Several members of Congress are expected to introduce legislation to help law enforcement track who actually owns anonymous shell companies. The House Financial Services Committee set up a special subcommittee on terrorist financing to address this issue.

"Congress can make it harder to use anonymous shell companies to launder money,” stated LeCompte. "Anonymous shell companies are part of why poor countries lose more money in tax evasion and corruption than they receive in aid.”

Read more about the Panama Papers