A federal control board overseeing Puerto Rico's finances gave the governor on Tuesday a list of proposed measures to turn around the U.S. territory's economy including downsizing the government, privatizing ports and charging tourists more for certain services.
The board warned that Puerto Rico needs to take swift action because it faces a larger deficit than originally projected at $68 billion, in addition to nearly $70 billion in public debt the governor has said is unpayable and needs restructuring.
"Puerto Rico's fiscal and economic problems are severe and could have dire consequences to its people and society if left unattended," the board said.
Board members said the new projected deficit is $10 billion larger than the one included in a proposed fiscal plan that has become a point of contention between the board and Puerto Rico's governor. The board last month rejected the plan submitted by Gov. Alejandro Garcia Padilla, who has refused to revise the plan to include any austerity measures.
In a 10-page letter sent to Garcia, the board said Puerto Rico should privatize certain government assets, implement labor, energy and tax reforms, seek public-private partnerships and cut non-essential services, among other things.
The board said it will identify those non-essential services in upcoming weeks, as well as point out ways to consolidate public agencies.
"Every month we wait represents lost opportunity for economic growth and Puerto Rico's ability to recover," said the board, which was created after U.S. President Barack Obama signed a rescue package for Puerto Rico in late June.
It stressed that Puerto Rico also needs to cut its education and health-care budgets, and said that furloughs and freezes across government agencies may be implemented.
The board also suggested charging tourists higher prices for services such as ferry transportation to the popular islands of Vieques and Culebra.
Garcia did not comment specifically on the proposed measures, but said the revised projected deficit only serves to highlight the need to restructure the island's debt.
"If Puerto Rico is left without money, it's a result of not embracing a wide debt-restructuring process," he said.
Puerto Rico officials recently warned the government will run out of money by February to pay public workers and that the island's public pension system will collapse next year due to lack of funds.
The board requested that Gov.-elect Ricardo Rossello, who takes over on Jan. 2, appoint a task force to work on the fiscal plan during his first week in office. The plan is supposed to be finalized by Jan. 31. Board members also requested that a package of legislative and administrative reforms be considered by Puerto Rico legislators by Feb. 15.
In its first conference call with reporters, the board said Tuesday that it will start talks with creditors this week. Puerto Rico has defaulted on millions of dollars' worth of government bonds, and a temporary moratorium on lawsuits that expires in February has protected the island from angry creditors.
Board member Ana Matosantos declined to say how much money would be available to pay Puerto Rico's pending debt.
"The problem is massive," she said, "and a deep debt restructuring will be required.
Control Board Outlines Measures to Fight Puerto Rico Crisis
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