SAN JUAN — Puerto Rican Gov. Ricardo Rossello decried claims that the U.S. territory would immediately fall into a state of collapse if the government fails to reach a debt-repayment agreement with bond collectors by Monday.
“There is what I think is a false narrative that Monday, the world ends,” Rossello told the Washington Examiner during an interview at the governor’s mansion on Saturday.
“If you could get agreements with different creditors, then you could do this without going to bankruptcy,” Rossello added.
The almost five-month-old Rossello administration has proposed a new fiscal plan to address the island’s $70 billion of debt — a large amount compared to its $10 billion annual budget. The governor’s plan includes structural reforms to the island’s finances and would work to create a sustainable path to long-term debt recovery — a challenge governors have been unable to solve for the past 17 years.
Rossello threw away the original debt-restructuring plan that had been recommended by a board created to oversee the process. Instead, the 38-year-old second-generation governor submitted a new plan that would wind down Puerto Rico’s Government Development Bank’s operations over the next decade.
On the first day as a gubernatorial candidate, Rossello announced his intention to streamline the territory’s 131 agencies to 35. Since taking office, he has followed through on his promise to shrink the government of nonessential employees and departments.
The island’s board, created through the Puerto Rico Oversight, Management and Economic Stability Act law last year, approved the plan on Friday and put the administration on course for bankruptcy negotiations.
“Our aspiration is to renegotiate, in good faith,” Rossello said. “I don’t want to seem too idealistic, but I want to give this a shot. If you can get agreements with different creditors, then yet you could do this without going to bankruptcy.”
Bondholders have filed lawsuits against Puerto Rico that are set to expire Monday.
Utility companies have been mostly unsuccessful in striking a deal with debtors. In addition, as a territory, not a U.S. city, Puerto Rico is prohibited from declaring bankruptcy; nevertheless, Rossello was optimistic about the process ending without collapse of the system.
“It’s kind of like Monday is when the stale litigation is lifted. I think there is parallel effort for continuing to talk. If some of these negotiations are advanced, there are plenty of alternatives,” said Rossello, who would not comment on details of the backup plans.
