Gov. Pedro Pierluisi Urrutia asked the Financial Oversight and Management Board on Wednesday “to reduce the barriers that have resulted in an increase in bureaucracy and costs.”

Pierluisi based his request on Section 209 of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).

“The stated goal of Congress for PROMESA and the board’s mandate is to help Puerto Rico achieve fiscal responsibility and access to capital markets. That said, the fiscal plan should not encourage a process to micromanage the government and its public corporations, which could result in the perpetuation of the existence of the board,” the governor said during the virtual public meeting of the board. “Given the implementation of the government’s adjustment plan and the other debt restructurings completed, I firmly believe that, as a fiscally responsible measure, the board must take concrete steps to reduce the bureaucratic costs associated with its policies and procedures.”

“While I recognize that PROMESA has provided useful accountability and transparency barriers for Puerto Rico, its implementation has been and continues to be extremely costly and has created a parallel bureaucracy that does not help position our economy in a more competitive light,” he added.

Pierluisi, whose bid for re-election was denied in last Sunday’s New Progressive Party gubernatorial primary, which was won by Resident Commissioner Jenniffer González Colón, said he also believes that the oversight board with its requirements seeks to remain in Puerto Rico.

“In my view, we are on track to achieve four balanced budgets by the end of fiscal year 2025,” he said. “This will become clearer with the upcoming audited financial statements. In terms of gaining access to the capital markets at reasonable rates, I am deeply concerned about the requirements that have been included in the certified tax plan, as they appear to be overkill on the part of the board. For example, the board indicates that it will evaluate the government’s ability to achieve relevant investment grade credit rating metrics and/or the ability to achieve and maintain an investment grade credit rating on its debts. This statement appears to require the government to achieve investment grade ratings in order to demonstrate market access.” “In my opinion,” the governor said, “this is much more than PROMESA requires and could result in the board existing for much longer than reasonably necessary at the expense of the people of Puerto Rico.”

“There is simply no basis or justification for the board to arbitrarily establish requirements that go beyond the language of PROMESA and that also appear to be at odds with the opinions of the markets,” Pierluisi continued. “I also question the board’s reliance on and reference in the Certified Fiscal Plan to metrics and criteria from only one of the nationally recognized rating agencies. The concept of market access at reasonable rates is highly subjective, as it does not establish specific numbers, benchmarks, thresholds or metrics of any kind. I am a firm believer in free markets and that the only determinant of market access at reasonable rates should be the markets themselves. Markets determine how much an issuer will have to pay in interest rates and how much it will be allowed to borrow. I say we let the markets speak.”

The governor went on to say that he wants “to make it clear that PROMESA and the Board have fulfilled the purpose of allowing Puerto Rico to adjust its balance sheet and achieve a sustainable level of debt.”

“However, I know for a fact, because I was a member of Congress at the time, that the intention behind PROMESA was not to establish a board that would become a parallel government that could prolong its presence,” Pierluisi said.

Oversight Board Executive Director Robert Mujica said by way of a response that “we are seeing this for the first time.”

“And I think it’s a conversation we need to have to make sure not only that we’re clear about what the standards are, but what we need to achieve them,” he said. “And we all need to redouble our efforts to make sure that happens because the board is not indefinite and has to disappear.”

Source: The San Juan Daily Star