6
/ Wednesday, September 22, 2021
Gov. Pedro Pierluisi, far right, participates in the FOMB’s most recent public meeting in San Juan. >Carlos Rivera Giusti
FOMB: Pension Cuts in Plan of Adjustment Will Stay in Place
Pierluisi vows to continue fighting against it
T
THE WEEKLY JOURNAL Staff
he proposed Plan of Adjustment (POA), which includes the annual payment obligations that the government of Puerto Rico must make to creditors, and includes cuts in public pensions, could be approved in early October, according to the optimistic expectations of the Financial Oversight and Management Board (FOMB), as the entity continues to negotiate with Gov. Pedro Pierluisi and the Legislature. Overall, the plan seeks to restructure the $35 billion of the government’s debt, as well as other claims against it, including the Public Employees Retirement System and the Public Buildings Authority. David Skeel, chairman of the FOMB, explained to EL VOCERO, the sister publication of THE WEEKLY JOURNAL, that the document under discussion contemplates reducing that debt to $7.4 billion, with the government issuing annual debt payments of $1.5 billion. “It is a dramatic restructuring looking forward and it is sustainable for Puerto Rico,” he said. However, the POA must be approved by Chief U.S. District Court Judge Laura Taylor Swain, who is overseeing the Puerto Rico government’s bankruptcy procedures. At the same time, the Legislature must pass a measure authorizing the
Pierluisi assured that he favors the POA, but not “new” debt of $7.4 billion, since creditors and the pension cuts, as he anticipated that he would public retirees must vote on or before October 4 fight this issue in Federal Court, where the POA on whether they support the POA. must be validated and approved. According to Skeel, there are already “For me, it is as if it were an ideological cause agreements with a large part of those involved, that does not make sense to include in the while those in the government “everyone adjustment plan,” Pierluisi said during the meeting. understands that now is the time to come out of “I reiterate that my administration is clear that this bankruptcy.” adjustment plan is excellent for The Plan of Adjustment Puerto Rico. I will be exhorting for the central government the Legislative Assembly to is the largest part of Puerto approve legislation so that the Rico’s debt restructuring, with broadcast that needs to be about $35 billion in claims by broadcast can be issued.” bondholders and creditors, He added that he will go to and more than $55 billion in The Plan of Adjustment court to oppose the pension pension liabilities. The POA for the central governcuts. “I am going to oppose includes an 8.5 percent cut to ment is the largest part any project that wants to cut public pensions of $1,500 or of Puerto Rico’s debt pensions and the government is more each month. restructuring, with $35 going to maintain its objection Meanwhile, during a billion in claims by bondto that part of the plan before recent public meeting, the holders and creditors, Judge Swain because I hope FOMB presented its Plan of and $55 billion in penthat the judge, in her sense of Adjustment and touted its sion liabilities. The POA benefits for Puerto Rico. The justice and sensitivity to this includes an 8.5 percent vulnerable population of the FOMB unanimously approved cut to public pensions people of Puerto Rico, does not the POA during the meeting of $1,500 or more each give way to those unnecessary held at the Convention Center, month. pension cuts.” as they assured that their main Skeel said the cuts are goal is for Puerto Rico to get necessary and blamed out of bankruptcy and return to it on decisions by past economic growth, at which time administrations that did not inject the needed the departure of the federal entity would occur. funds to pay pensions. “The plan protects The governor reaffirmed he is against the pensions. Before Promesa, there was a risk that pension cuts and accused the board of having an “ideological cause” against pensions which, he said, retirees would lose their pensions. [With the POA], 72 percent of retirees will not have any cuts to would not represent a significant portion of the their pensions,” Skeel noted. government’s budget.
In fact,
