Completing Restructuring of Govt Debt is Top Priority for AAFAF
Executive director outlines plans for the next 100 days
The Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish acronym) divulged its key priorities while the government braces to present its fiscal plan by Feb. 20, and as the Financial Oversight and Management Board (FOMB) introduces its Plan of Adjustment, or POA, of the island’s debt load today.
Omar Marrero, executive director of AAFAF, recently held a roundtable with members of the press to outline the entity’s headwinds, accomplishments and goals, looking forward to economic recovery from the COVID-19 pandemic, natural disasters and the government’s bankruptcy process.
“There is no higher priority here than the restructuring of the central government [debt]. AAFAF’s plan for the next 100 days is very ambitious, but at the core is the restructuring of the central government,” he affirmed. For the government’s own POA, also introduced today, Marrero informed that they included a framework to restructure the Puerto Rico Aqueduct and Sewer Authority (PRASA) and the Puerto Rico Industrial Development Company (PRIDCO).
Moreover, the agency’s agenda includes a revision of the Restructuring Support Agreement (RSA) for the Puerto Rico Electric Power Authority (PREPA) reached with bondholders in 2019, on the utility’s $9 billion debt load. However, the RSA has not been approved because its analysis has been delayed by Judge Taylor Swain, who oversees the island’s debt and bankruptcy legal proceedings. Marrero affirmed that restructuring PREPA’s debt comes second in priority to that of restructuring the central government’s debt.
Meanwhile, AAFAF is working closely with the Puerto Rico Treasury Department – known as Hacienda – and the Office of Management and Budget (OMB) to develop their budgets. While he asserted that the government is engaged in a “dynamic process” with FOMB for these means, he underscored that Gov. Pedro Pierluisi’s administration is opposed to any additional budget cuts proposed by the FOMB for government pensions, the University of Puerto Rico and municipalities.
Although the past administration, under which Marrero served, approved in 2019 a slash of 8.5 percent in pensions for government retirees, he affirmed that the current government would oppose further cuts due to the economic crisis exacerbated by the pandemic.
Regarding obligating federal funds before the stipulated deadlines, the official stated that “we want to finalize what is the disbursement of these funds. In the event that the federal government provides additional funds for state and local governments, you will be hearing from us how those funds are being prioritized. But for the moment, our goal is to continue this year with the disbursement, begin the audit and be able to work on the closeout of these funds.” He emphasized that the OMB is working with relevant agencies to ensure that the remaining $157 million remaining funds are disbursed. These must be obligated by March 1, 2021.
Multimillion-Dollar Investment on Broadband
Marrero revealed during the roundtable that the administration identified roughly $450 million to enhance the island’s telecommunications infrastructure, and stated that this allocation would be included in the government’s fiscal plan.
“This project seeks to provide incentives to communications companies so they may invest in rural areas and increase access to broadband. So, this is for increasing broadband access in rural zones through incentives aimed at private companies so that they improve their performance,” he stated, reiterating that this infrastructure was devastated after the onslaught of Hurricane Maria in 2017.
However, the Federal Communications Commission (FCC) had already earmarked $2 billion so that these companies would restore their service. Regarding this issue, the official opined that these allocations “are not enough” and that AAFAF is working alongside the FOMB and the Telecommunications Bureau to ensure that there is no duplicity in funds for the same purpose.
“They are not tax incentives… Both the government and the Board understand that this investment for the next five years does not seek to replace those funds and does not seek to defeat the purposes that those funds seek. On the contrary, it is to complement a directed area and we are going to find a way to make it so,” Marrero said.
Fuente: The Weekly Journal