A plan of adjustment by Puerto Rico's financial oversight board to restructure debt and make other reforms is now on hold to help the commonwealth deal with the COVID-19 crisis.
The Financial Oversight and Management Board for Puerto Rico said in a statement March 21 that its sole focus will be on helping Puerto Rico through the immediate crisis, and that it will collaborate with political leaders there "to find reasonable and meaningful financial and policy solutions" to provide appropriate support.
The board sounded a note of fiscal caution as well. "We cannot, however, sanction and will point out actions that go against prudent and sound fiscal policy in protecting the interests of the people of Puerto Rico. Together, we all need to be responsible custodians of the people's money," the statement said.
In February, the oversight board announced it had reached an agreement with some bondholders that would cut Puerto Rico's debt service by 56% and make it easier for the commonwealth to emerge from bankruptcy. The latest agreement follows one struck with a smaller group of bondholders, and together the two agreements allow Puerto Rico to reduce its debt service to $39.7 billion from $90.4 billion, and reduces maximum annual debt service by 70%, to less than $1.5 billion a year.
The oversight board has already reached agreements with retirees and public unions, and the three agreements were to be part of an amended plan of adjustment the board filed with the bankruptcy court that had originally been scheduled for hearings and a confirmation hearing later this year.