End of impasse between Puerto Rico and the Federal officials on loan
After months of delay, Governor Ricardo Rosselló (D, NPP) of Puerto Rico announced on Thursday, March 22 that he had reached a deal with US Treasury Secretary Steven Mnuchin concerning the release of community disaster loans to assist Puerto Rico in recovery efforts.
Public officials in Puerto Rico will be able to access community disaster loan funds as they see fit until March 2020 as the territory’s cash balance falls below $1.1 billion, on the approval of a appointed board overseeing the territory’s finances and the judge overseeing its bankruptcy deal. Governor Rosselló had previously criticized Mnuchin for failing to expediently deliver federal funding and provide the necessary funding to address the territory’s needs.
The impasse began in the wake of natural disaster that struck Puerto Rico, and other US territories, as the US territory was in the process of declaring bankruptcy and officials were searching for a comprehensive financial restructuring. Resident Commissioner of Puerto Rico Jenniffer González-Colón (R) stated in a recent US House Subcommittee on National Security hearing that “The people of Puerto Rico have been admirably patient and justifiably tired” in there wait for federal funding. After six months, many residents and business in Puerto Rico are still left without power, as there remains limited financial resources from both the territory and federal government to fully assist citizens.
The US Treasury has been wary of releasing funds to Puerto Rico, with the territory owing approximately $70 billion to bondholders, fearing failure to repay and hoping to protect taxpayers. Governor Rosselló and public officials across Puerto Rico have been announcing that funding has not been coming to the territory, and that it has been treated differently than any state would in these conditions. Community disaster loans have historically been forgiven, however the US Treasury has been seeking to deny the possibility of loan forgiveness in this case and that loan repayment is to be given the highest priority.
Despite difficult negotiations, residents and public officials in Puerto Rico are hoping that this marks a significant step towards providing adequate relief funding to assist in financial stabilization efforts. Following the deal, Puerto Rico must wait for the Puerto Rican legislature, Oversight Board, and federal judge to approve the plans before receive the proposed funding is allocated.