Puerto Rico Gov. Alejandro Garcia Padilla challenges new debt-tackling federal control board
In a probably expected turn of events given Puerto Rico Governor Alejandro Garcia Padilla’s past performance, we now have a clash between the PROMESA Oversight Board and the territory executive. After Garcia Padilla’s proposed fiscal plan was lambasted for lacking important requirements, including a debt sustainability analysis, the governor is now saying he won’t submit a revised plan.
In what could be a test of the board’s powers, Gov. Alejandro Garcia Padilla announced Monday that he will not submit an amended fiscal plan — the board’s first request of the island’s governor. He said he believes that new austerity measures would only worsen the crisis and insisted that the board restructure nearly $70 billion in public debt that he has said is unpayable.
“It’s not right, and it’s not necessary,” he said of austerity measures. “That would push us into an economic death spiral. It would mark a return to policies of depression.”
Board members who met in Puerto Rico for the first time last week said the 10-year plan issued last month needs to be amended in part because it is not realistic and assumes federal financial help when none is likely. They requested that Garcia submit an amended plan by Dec. 15 so they could approve a final version by Jan. 31.
It was not immediately clear what happens now that the governor has rejected the board’s request. A board spokesman said he was checking on whether board members would comment on Garcia’s announcement.
Garcia steps down as governor on Jan. 1, but he has promised to reject any austerity measures while still in power.
Absent a revised plan from the current governor, the board could seek to unilaterally impose a new plan, or as might be likely, wait for the incoming administration of Ricardo Rosselló to present a new plan that meets the requirements set by the board. Until then, we’re left in limbo as to what might happen.