Members of the Puerto Rico Board of Directors met with Puerto Rican leaders on Tuesday to discuss the committee’s proposed adjustment plan, including how to deal with unresolved disagreements over pension payments between the parties.
Some board members have sought a “grand deal” with the local government to enlist their support for the plan, which they hope would give lawmakers approval for new bonds required to close the bankruptcy deal. But government officials have opposed pension cuts, saying they would not issue new bonds if pensions were touched.
“The plan provides for significant cuts in payments to bondholders and unsecured creditors, as well as much smaller cuts for retirees,” the board said in a statement after the meeting.
“Most retirees do not suffer cuts. Less than 30% of retirees suffer cuts of up to 8.5% in their retirement benefits, ”the board said. “This reduction in pension benefits has been the focus of concern. The Board understands these concerns and urged the governor and the legislature to discuss them directly and in greater detail. “
Governor Pedro Pierluisi called the discussions about the economic conditions of the negotiated adjustment plan “productive”.
“We discussed the sustainability of the proposed debt payments, the upcoming deadlines and ensuring the payment of public pensions,” Pierluisi said in a statement. “I reiterated my position that we will protect our retirees from proposed cuts in our commitment to work together for the good of the people. We all want Puerto Rico to come out of bankruptcy and to regain control of our priorities and our future. Our employees can be sure that I will always put them first to ensure that we get back to the progress we want and need, ”said Pierluisi.
“I think it was a very productive session listening to local Commonwealth leaders,” said board member Justin Peterson, who attended. “You are the elected officials.”
Present with Peterson were Chairman David Skeel, Board Members Antonio Medina and Arthur Gonzalez, and Chairwoman Natalie Jaresko. In addition to Pierluisi, Senate President José Dalmau, Speaker of the House of Representatives Rafael Hernández Montañez, Chairman of the Senate Finance Committee, Juan Zaragoza Gómez, and other representatives of the legislature and senators were also present.
The board said that any adjustment plan must continue to meet the court’s requirements for confirmation. “Let’s work together to pass the legislation that would implement this proposed plan.”
Everyone shared the goal of ending Puerto Rico’s bankruptcy in court and ending the board, Peterson said. “I am very encouraged…. We were able to hold an intensive discussion. “
In a tweet on Tuesday, Peterson said the board should be dissolved after Puerto Rico’s debts were adjusted in Title III bankruptcy proceedings. The Puerto Rico Oversight, Management, and Economic Stability Act, which established the board, states that the board should not be dissolved until the island’s government has four consecutive balanced budgets with modified accruals and regains access to them Has capital markets.
The island’s central government has not regained access to capital markets and the earliest structurally balanced budget would be the current budget. Peterson said Congress can change the law and would support such a change.
Peterson said he expected ongoing discussions between the board and local leaders. He said he was willing to have these discussions as face-to-face meetings, like Tuesday’s meeting, if that made sense.