Puerto Rico debt deal hits snag ahead of elections

A plan to pull Puerto Rico out of a type of bankruptcy by 2021 hit a major obstacle Friday when a new member that US President Donald Trump appointed to a federal control board overseeing the island’s finances rejected the immediate filing of a debt-restructuring proposal.

The current governor has said the debt is unpayable. A new governor will be chosen in elections today, Tuesday.

Trump’s appointee Justin Peterson, who once advised creditors in financial disputes involving Puerto Rico and Argentina, abruptly dropped out of the board’s public meeting after clashing with them several times, leaving members without a quorum to approve the proposal.

The other board members said they would continue negotiations with creditors as Puerto Rico restructures a portion of its more than US$70-billion public debt load in an ongoing bankruptcy-like proceeding in federal court. However, the board members acknowledged they could not move forward with the plan without Peterson’s vote or unless new members are appointed to fill the three remaining vacancies on the seven-member board.

“I’m hopeful that we will be able to revisit that decision soon,” said board Chairman David Skeel in a press conference following the meeting, adding that he didn’t know when new members would be appointed.

Before leaving the meeting, Peterson called the plan inequitable and non-consensual.

“They’re getting nothing,” he said of bondholders.

In a series of tweets after the meeting, he said he disagreed with a last-minute proposal by a fellow board member to immediately file the plan without first negotiating with creditors. He called that unacceptable and said it was “emblematic of the game playing and secrecy that has plagued these negotiations”.

It is the biggest public clash the board has faced since the United States Congress created the board in 2016, a year after Puerto Rico announced it could not pay its debt after decades of mismanagement, corruption and excessive borrowing to balance budgets. In May 2017, it filed for the biggest municipal bankruptcy in US history, just four months before Hurricane Maria slammed into the island as a powerful Category 4 storm.

CANDIDATES FOR GOVERNOR

Candidates from five parties are vying Tuesday to become Puerto Rico’s next governor, facing voters in the US territory weary of corruption and seeking relief from an onslaught of hurricanes, earthquakes, and the coronavirus that has deepened the decade-long economic crisis.

The field includes four candidates not allied with the two parties that have long dominated politics on the island – the pro-statehood New Progressive Party and the Popular Democratic Party, which supports keeping territorial status. They are Juan Dalmau of the Puerto Rican Independence Party, Alexandra Lúgaro of the Citizen Victory Movement, César Vázquez of the Dignity Project, and Eliezer Molina, who is running as an independent.

Representing the two traditional parties are Charlie Delgado for the Popular Democrats, the long-time mayor of the northwestern coastal city of Isabela, and Pedro Pierluisi for the New Progressives, who beat interim Governor Wanda Vázquez in the party primary. Pierluisi represented the US territory in Congress for eight years and served briefly as governor during last year’s political turmoil.

In addition to electing a governor, Puerto Ricans will be voting in a non-binding referendum on US statehood. Regardless of the outcome of the vote, Congress would have to approve of it.

AP