The Financial Oversight and Management Board overseeing Puerto Rico's bankruptcy and fiscal recovery plans is losing Chairman Jose Carrion and board member Carlos M. Garcia, who announced their departures Wednesday.
Mr. Carrion will leave Oct. 5 or when a successor is appointed by the President Donald Trump or Congress. He called his four-year tenure "the most challenging, toughest and demanding job I have ever had in my professional career," but one that provided the greatest opportunity to make a positive contribution to Puerto Rico.
"I am most proud to have defended pension payments to all public employees despite the insolvency of the public pension system. We have also certified responsible fiscal plans and budgets with appropriate controls, regardless of political considerations," and made progress restructuring public debt that has saved billions of dollars in principal and interest, he said.
Mr. Carrion said his chief disappointment is "the lack of commitment and political will to implement structural reforms necessary to propel Puerto Rico's economy beyond its dependency on federal transfers."
Congress created the oversight board in 2016 to help restore financial stability, including restructuring $74 billion in bond debt and $50 billion in unfunded pension liabilities. On June 1, the Supreme Court ruled unanimously that board members were properly appointed, dismissing challenges brought by some bondholders and issuers that distracted from the board's work.
The board's plan of adjustment to restructure debt and make other reforms is now on hold to help the commonwealth deal with the COVID-19 crisis. In February, the oversight board reached an agreement with some bondholders to cut Puerto Rico's debt service by 56% and make it easier for the commonwealth to emerge from bankruptcy. That 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. Those plus ones already reached with retirees and public unions were to be part of an amended plan of adjustment the board filed with the bankruptcy court and originally scheduled for a confirmation hearing later this year.