Thursday, February 22, 2024
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Puerto Rico, US board at odds over how to exit bankruptcy

SAN JUAN, PUERTO RICO (AP) – Puerto Rico’s government and a federal control board overseeing the island’s finances disagreed on Friday over how the United States (US) territory should exit a lengthy and contentious bankruptcy.

The two sides were at odds over a debt restructuring agreement for Puerto Rico’s power company and how to generate revenue for the island’s transportation authority.

Prominent legislators, including the president of Puerto Rico’s Senate, remain unconvinced by a tentative deal that would restructure more than USD9 billion in debt held by the Electric Power Authority, the island’s largest government agency.

Bondholders have to agree to the deal, which would cut the power company’s debt by more than 30 per cent. But legislators and many citizens argue it would lead to even greater increases in power bills even.

Another sticking point between the board and Puerto Rico’s government is a proposed 8.3-per-cent yearly increase in tolls through fiscal year 2024 to improve road conditions and boost revenue for the island’s Highways and Transportation Authority.

The board said only 13 per cent of Puerto Rico’s highways are in good condition, compared with a median of 84 per cent in the US mainland. It also noted that toll fares haven’t been adjusted since 2005.

Governor Pedro Pierluisi, who attended the board’s meeting on Friday, rejected the proposed increase and said it’s not necessary because there are other sources of revenue. He noted that the average toll per mile in Puerto Rico is among the highest of any US jurisdiction.

He said his administration remains committed to pulling the Highways and Transportation Authority out of bankruptcy by year’s end, but that he will not implement measures that would affect users.

The debt restructurings for the authority and Puerto Rico’s power company are the last major ones still pending nearly five years after the island filed for the biggest municipal bankruptcy in US history after announcing it couldn’t pay its more than USD70 billion public debt load.