Power 4 Puerto Rico statement on House Natural Resources Committee Hearing on PROMESA, and deep austerity imposed by unelected Junta it created

May 2nd, 2019

Washington, D.C. --  Today, Power 4 Puerto Rico Director Erica Gonzalez issued the following statement on the House Natural Resources Committee Hearing on PROMESE:

“Today’s hearing examining the implementation of PROMESA should reveal how an unelected, imposed fiscal control board (the Junta in Spanish) has by no means prompted the stabilization and economic development that many members of Congress intended for Puerto Rico through this legislation.

“Instead, the fiscal control board, at the command of private consultants with conflicts of interests, has pushed through an austerity program that is hurting the island’s public university system, public schools, and the pensions of aging workers to create sweetheart deals for bondholders. The board is turning a vice grip on the same people it is somehow expecting revenue from as it depletes public resources, and the services they support.  

“The fiscal control board has ignored warnings from leading economists about pushing through a debt restructuring agreement that mortgages the future of the people of the island for the next 40 years in an unsustainable fashion, without any adjustment that would reflect future economic and fiscal conditions. This could alarmingly set up another debt default.

“Puerto Rico’s debt has yet to be fully and independently audited, leaving Puerto Ricans to mobilize for transparency via a community-driven accounting of the debt. This is all the more urgent considering that even the Junta has taken steps to declare $6 billion of the $70 billion total debt as unconstitutional. Yet, the fiscal control board has failed to pursue any course of real action and has gone as far as to try to block a motion demanding the disclosure of individuals and parties that may have been responsible for Puerto Rico’s financial collapse.

“Lastly, the imposition of this 7-member board –which is essentially deciding Puerto Rico’s future and usurping local governance, representation and decision-making—is another layer of colonial dominance and undemocratic by every standard.  

Today, we urge Congress Members and the media to pose the following questions to the witness representing the FOMB:

  • According to the New York Times, McKinsey & Company is being paid $50 million and counting from Puerto Rican taxpayer money to consult for the FOMB. Meanwhile, that same company was found to also own Puerto Rico debt. Why does that firm still have a contract with your entity?  

  • In order to erase any doubt in the public’s mind about your commitment to transparency, would you support or oppose legislation introduced by Congresswoman Nydia Velázquez (NY) that would ban such conflicts of interest in FOMB contracting practices?

  • Speaking of transparency, why have you not publicly disclosed the Government’s proposed budget? How can you demand transparency from the duly elected representatives of the people while you continue to block the public’s access to the budget proposal you refuse to disclose?  

  • Why was the FOMB calling for haircuts to Puerto Rico’s debts of up to 70-80%, while now, after Hurricane Maria it is reaching agreements for some creditors to keep as much as 92 cents on the dollar they invested in risky, and potentially unconstitutionally issued, bonds?

  • How is it fair for pensioners to get a worse deal than wealthy Wall Street investors?  

  • How can you justify imposing cuts of close to 50% of the University of Puerto Rico’s budget when the UPR’s share of the debt is just under $500 million, out of $70 billion?

  • Puerto Rico is about to face an impending Medicaid cliff that could leave hundreds of thousands of Puerto Ricans without health insurance or with reduced benefits if Congress doesn’t act to fund the program in the island. At a time of such hardship in Puerto Rico, why are you imposing a $1.8 billion cut to Puerto Rico’s health programs?

  • Why are you continuing to insist on further reductions to workers’ rights without having conducted one single economic study showing your touted “benefits” to the Puerto Rican economy?