Puerto Rico's new governor is seeking more time to present a fiscal turnaround plan for the struggling U.S. territory, saying the Jan. 31 deadline set by the commonwealth's federal oversight board is too tight.
In a letter to the board dated Jan. 4, a representative for Governor Ricardo Rossello, who was sworn in on Monday, sought at least a 45-day extension, which would push the deadline to present a plan to March 17.
Under the territory's federal rescue law known as PROMESA, passed last year, Puerto Rico's governor has to present a blueprint for the island's financial future that must be approved by the federally-appointed board tasked with managing its dire fiscal position.
The board last year set a Jan. 31 deadline for the plan, but Elias Sanchez, Rossello's liaison to the board, said the deadline would give the administration too little time to assess Puerto Rico's finances or attempt restructuring talks.
The governor also sought a 75-day extension of PROMESA's so-called automatic stay provision, which prevents creditors from suing Puerto Rico over missed debt payments. With the stay set to expire on Feb. 15, Rossello asked the board to extend it until May 1.
That would give the island more time to try to negotiate restructuring talks with holders of $70 billion in debt issued by Puerto Rico and its public agencies.
If the deadline expired in February, it could force Puerto Rico or the board to preemptively push some public agencies into a legal process under PROMESA akin to U.S. bankruptcy protection, known as Title III, the letter said.
"We are very concerned that a rushed process to certify a fiscal plan by January 31, 2017, and a view that the movement of the PROMESA stay on February 15, 2017, is an intractable deadline, could prematurely precipitate Title III filings for some or all" of the government's public debt issuers, the letter stated.
Puerto Rico owes $18 billion in general obligation debt, backed only by a constitutional promise; $15 billion in so-called COFINA debt backed by sales tax proceeds, and billions more in debt at myriad public entities, such as the PREPA power authority and PRASA water utility.
The island has an unemployment rate more than twice the U.S. average, its 3.5 million population is shrinking as locals flock to the mainland and nearly half of those who remain live in poverty.
(Reporting by Nick Brown; editing by Daniel Bases, G Crosse)
By Nick Brown
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