Washington, DC -- The Power 4 Puerto Rico coalition issued the following statement after Judge Laura Taylor Swain approved a Puerto Rico debt restructuring deal involving the Puerto Rico Sales Tax Financing Corporation (known as COFINA by its Spanish acronym):
“Behind the massive savings boasted by the local government and the Financial Oversight and Management Board, is a bad deal that benefits a handful of bondholders at the expense of local residents. We cannot continue to allow the FOMB to use PROMESA as a tool for predatory funds to maximize their profits through harsh austerity measures. Congress needs to consider these risks and act immediately.
“The decision announced Monday to uphold an agreement between Puerto Rico’s creditors and local authorities is a stark reminder that Puerto Rico is at the mercy of predatory investors who have no regard for the well-being of people still in the throes of a badly mismanaged federal recovery effort. This agreement hamstrings Puerto Rico’s ability to use its own tax revenues to make critical investments that meet its residents’ needs. For the next 40 years, a handful of investors will receive 53% of Puerto Rico’s sales tax revenues. Those are funds that can no longer be invested in housing, health care, infrastructure or economic development.
“Let us be clear: the people of Puerto Rico are stuck with this horrendous deal because they were shut out of Congress by Wall Street at the height of the debt crisis. Our coalition is encouraged that new leadership in the U.S. House of Representatives has signaled a change of pace. In the past, Congress has been quick to impose austerity on Puerto Rico through laws like PROMESA but slow to address the economic development, health care, labor, or environmental needs of its people. Power 4 Puerto Rico, since its formation in the aftermath of Hurricane María, has sought to reverse that harmful trend.
“The story of PROMESA is the story of deepening poverty in Puerto Rico. The decision by Judge Swain should not be a nail in the coffin, but rather a wake up call to Congress. We demand Congress refocus and take actions like strengthening Puerto Rican families by investing in Medicaid, expanding the Child and Earned Income tax credits, and exploring ways to ease the territory’s debt burden through proposals such as the United States Territorial Relief Act of 2018. We need our leaders to support these and other alternatives to the punitive approach of PROMESA.”