US House committee members question Oversight Board debt estimates

by | Jan 30, 2019 | Puerto Rico | Comments

Puerto Rico’s economic troubles have been plaguing the islands for years, but the newly elected United States House of Representatives may be exactly what the territory needs. Several newly arrived members of Congress wish to probe the board that was placed in charge of Puerto Rico’s financial crisis in order to determine if the actions they are taking are truly what is best for the island.

As of writing this article, Puerto Rico’s overall debt sits at over 70 billion dollars and continues to rise. In response to this issue, The Obama Administration created The Financial Oversight and Management Board, or “FOMB,” as part of The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). The board’s plan to bring financial stability primarily consists of cutting Puerto Rico’s public spending so that the territory can focus on repaying its debt.

However, lowering the budget has brought several new issues to the islands such as the closure of hundreds of public schools. Puerto Rico’s government proposed slashing funds for schools in half in order to save money with their reasoning being that student enrollment is too low. Ironically, the reason for a low influx of students may actually stem from the lack of university funding itself. Because of problems such as these, residents are leaving Puerto Rico at an extremely high rate in order to pursue a new start in the United States.

Representative Raúl M. Grijalva (D) of Arizona, the chair of the US House Committee on Natural Resources, is one of several representatives who are commencing the investigation of the board under the pretense of inaccurate decision making on the FOMB’s part. He is trying to bring committee members to Puerto Rico in order to understand just how the current debt estimates were created, especially since they have radically increased after the US Government assisted Puerto Rico after Hurricane Maria.

After submitting their most recent debt estimate at several hundred million dollars a year over the span of the next 40 years, congressional representatives have become skeptical about how their evaluations have been made. Other issues have been raised against the board such as one law on the island known as “Act 22” that allows those of large wealth who only live in Puerto Rico “part time” to be exempt from paying taxes. Claims of possible conflicts of interests have also been leveled against the board due to how the policies enacted by them have potentially helped possible beneficiaries such as Santander Securities.

With Puerto Rico’s unemployment rate sitting at three times that of the United States, it unknown how the territory plans to produce the funds necessary to pay off the debt or if the US Government will take any further action regarding the islands.