US Treasury releases partial disaster loan to Puerto Rico

The US Department of Treasury announced that it has authorized a $2.065 billion loan, as part of a Community Disaster Loan (CDL) that Congress authorized to address the severe liquidity issues the Commonwealth faced in the aftermath of Hurricane Maria.  Although the law was signed four months ago, disbursement was contingent on Department of Homeland Security (DHS) and Treasury officials giving the green light. Historically, 94% of CDL loans are condoned, a fact that seems to make Puerto Rico authorities comfortable accepting the loan without guarantees that the financing will be forgiven.

The more than $2 billion approved for the loan constitutes less than half of the original $4.9 million approved by Congress That amount was supposed to be available to localities in Texas, Florida, California, the US Virgin Islands and Puerto Rico. However, the intent of the provision in the hurricane relief supplemental appropriations bill approved last year was for the bulk of the money to go to Puerto Rico

At least 14% of PREPA clients remain in the dark

More than five months after the devastating category 4 Hurricane Maria hit Puerto Rico, approximately 13.76% of the Electric Power Authority’s (PREPA) subscribers are still without power. According to PREPA Interim Director Justo L. González Torres, the public utility has reestablished service to 86.24% of subscribers, which translates into approximately 1.2 million clients.

González Torres also said that equipment to fix the electric grid is arriving and he does not expect major problems on this front. The US Army Corps of Engineers projected that 95% of service would be reestablished by the end of next month. Previous predictions have fallen short in the past and many sectors of the population continue to grow frustrated at the prospect of remaining without power so close to the next hurricane season, which starts again this summer. Last month, the federal government approved $2 billion to help fix the electric system in Puerto Rico even though these funds fall short of the $14 billion the government says is needed.

No money for debt payments in next budget

Governor Ricardo Rosselló confirmed yesterday that the next budget for the government of Puerto Rico, expected to be submitted to the Fiscal Board April 16, does not contemplate debt service. This latest statement leaves no doubt over his position that bondholders will have to address their issues in court.

Given the possibility of a budget surplus as a consequence of the billions of dollars promised to Puerto Rico to mitigate the disaster caused by Hurricane María, Members of Congress from both parties have asked that any budget surplus be used to avoid cuts to pension systems and promote the Island’s economic growth. Those Members of Congress are: Democratic Senators Elizabeth Warren and Robert Menéndez, House Republicans Sean Duffy and Tom MacArthur, and House Democrats Nydia Velázquez, Luis Gutiérrez, and Raúl Grijalva.

The fiscal plan over the next five years projects an average surplus of almost $600 million. The proposed plan offers the possibilities of having $600 million left over every year. The document under review by the Fiscal Oversight Board (FOB) says that the ability to pay ranges from $13 billion to $26 billion.

Rosselló in DC this week

Governor Rosselló spent the weekend and part of the week in Washington, DC. The Governor visited the White House this week as part of the National Governors Association (NGA) winter meeting. While in the nation’s capital, Rosselló met with unnamed White House officials, as well as with Commerce Secretary Wilbur Ross. Rosselló also attended a press conference with Democratic Governors to promote gun control and safety measures.