Puerto Rico: Governor-elect says Islands will run out of money by February

In case you have not heard, or were expecting the year to end on a good note, the incoming administration of Governor-elect Ricardo Rosselló is now warning that it will not have enough cash on hand to meet payroll in February. The warning has been one we have heard before, with Rosselló’s New Progressive Party predecessor Luis Fortuño, who had to turn to loans to cover his administration’s first payroll. The problem is that now, Puerto Rico has lost access to the financial markets.

Rossello said that only about $147 million remains in the island’s coffers. His announcement comes amid ongoing transition hearings in which Puerto Rico public agencies are presenting their current financial status and accomplishments for the past four years.

Rossello said his administration will investigate whether there was any negligence involved in the way funds were managed in the past four years. He said he will sign several administrative orders targeting the economic crisis after being sworn in on Jan. 2.

Not much is known in terms of possible alternatives to address the cash shortage. While the governor-elect seems to have a better reputation withg bondholders, this does not guarantee that his administration can regain access to the markets just on that factor. In addition, complicating this scenario is the fact that the moratorium on suits involving debt payments imposed by PROMESA, is also due to end early next year.