A fiscal recovery plan for Puerto Rico that is scheduled to be certified April 20 by its oversight board is expected to bring pension cuts, reduced payments to bondholders and even more legal and political skirmishing that will test the board's mettle.
Taking heat from all sides are members of the federal Financial Oversight and Management Board, which was created in June 2016 under the Puerto Rico Oversight, Management and Economic Stability Act. PROMESA calls for fiscal reforms that would also improve access to capital markets after the commonwealth racked up as much as $120 billion in outstanding debt, including $50 billion or more in unfunded pension liability. Title III of PROMESA created an avenue for Puerto Rico to file for bankruptcy in May 2017 amid competing claims from bondholders, retirees, insurers and others in what is one of the largest bankruptcies in American history.
PROMESA also gave the oversight board authority to certify and enforce a fiscal plan.
This will be the oversight board's second fiscal plan. The first, certified in 2017, was derailed by two hurricanes that further harmed the commonwealth's finances.
In a final version submitted to the board on April 5, Puerto Rico Gov. Ricardo Rossello said the commonwealth and the board "have made good progress" toward consensus, and are now only $100 million apart on projected annual savings from $1.5 billion in budget cuts sought by the board.
Getting consensus on pension reform is another matter, with the governor repeatedly and publicly refusing to consider it.