June 15, 2021

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Natalie Jaresko: “we are going to emerge from bankruptcy in 2021”

The executive director of the Fiscal Oversight Board (JSF), Natalie Jaresko, expressed her confidence that in 2021 there will be effective communication with the new government and the new Legislature, that everyone can work towards the common goal of finishing removing the government of bankruptcy and that the federal entity concludes its functions.

Jaresko commented that, although “there has been some cooperation and collaboration from the government,” the work of the Board “has been somewhat difficult. Not only for political reasons, but also because of the earthquakes, the hurricanes, the pandemic. So there is a mixed bag of reasons why not much progress has been made. “

“But I am very hopeful with the new government, with the new legislature, that we all have the same goal, which is to end the Board. And for the Board to leave, you have to achieve some very clear things; it is necessary to restore balanced budgets and restore fiscal responsibility. So I hope that we do not have any more interruptions, be it from God, understand hurricanes, earthquakes and the rest, and I hope that the new government, with new energies, a new approach, can achieve the key things that must be done ”, predicted the executive director of the JSF.

He referred in particular to the Legislature, whose future composition will be much more varied in terms of parties and ideology, and will include members who have openly expressed their rejection of the fiscal entity, and assured that he hopes to work with all legislators for the common goal to help Puerto Rico and put an end to the work of the Board.

“We have to work with all of them, we have to meet, have an open dialogue, in which everyone can express their points of view and be heard, and all do the best for the well-being of Puerto Rico. Once again, no matter which party is in charge, I think everyone agrees to want to end Promesa as soon as possible, to end the work of the Board here. And for our work to finish, the law is very clear on what to do: we have to get out of bankruptcy; we have to have balanced budgets, you cannot spend more than what is in the budget; and we have to return to have fiscal responsibility; we have to complete our audited financial statements; We have to try to lift the economy by working together, we have to succeed in implementing structural reforms; we have to invest the money for the recovery; we have to invest the COVID money. And I consider that, perhaps there may be disagreement on the details, but everyone agrees that they want a prosperous Puerto Rico, they want people to get out of poverty, they want to end Promesa and go back to govern completely with elected officials in Puerto Rico . So I think our objectives are the same and what we need to have is an open dialogue and try to listen to each other, ”insisted Jaresko.

Primera Hora asked Jaresko about the debt restructuring process and the executive director stated that she was confident that it would be achieved and that 2021 would be the year that Puerto Rico would emerge from bankruptcy.

“We have a deadline set by the court. The judge (Laura Taylor Swain) asked us to submit an adjustment plan, or something as close to that as possible, by February 10th. Let’s do it. We will honor that request of the court. We are in a mediation process. I cannot give details of that process. But everyone is under the understanding that we must deliver an adjustment plan, or something close to that, by February 10th. I believe that we can get Puerto Rico out of bankruptcy, and I believe that we can do it in a sustainable way that can be paid for, ”he said.

“I think Puerto Rico is not the same as it was before the pandemic, it is not the same as it was before the earthquakes, and it is not the same as it was before the hurricanes. Puerto Rico has suffered a lot of damage, severe, and the economy has been marked by each of these events. So, despite the fact that we had already submitted an adjustment plan last February, which at that time I considered was sustainable and was the best way out of bankruptcy, I understand that the pandemic, the closure of the economy, the closure of the tourism and the hospitality sector of the economy have greatly affected the economy and we must try to achieve a new agreement that is more viable for Puerto Rico, ”he said.

“But I feel like we are going to emerge from bankruptcy in 2021. That is our goal, our goal. We have a united Board, everyone wants the same thing. And I believe that the governor (Pedro Pierluisi) and the Legislature also want that same thing. But, I must reiterate, it is getting out of bankruptcy in a sustainable and sustainable way for Puerto Rico. That means that the government has the funds to continue providing basic services, ensuring pensions, and all the things provided in Promesa. So it must be a viable bankruptcy exit that allows the government of Puerto Rico to sustain itself and continue to operate. It may not be able to maintain things that are luxuries, but it should be able to continue offering essential services and continue serving the people of Puerto Rico, ”he insisted.

Jaresko stressed the need for the government to adopt recommendations that the Board has repeatedly made to achieve a rebound in the economy, which has been in a process of contraction for several years.

“An important part of all of that is achieving economic growth. We have to focus on growing the size of the economy, creating new jobs, creating more prosperity. And that means the government is going to have to pay more attention to structural reforms. We must ensure that people are better trained for the jobs of the future, we must improve the ease of doing business, we must have a better public education system. We have to give people the tools, create the environment that allows us to grow and have a better and wider environment. We cannot remain immobile, ”he insisted. “And we have many tools to achieve it. The government will have a large amount of funds to invest in the island’s infrastructure. They are $ 10,000 million for PREPA (Electric Power Authority), $ 2,000 million for the Department of Education (DE). Those are huge sums, to be able to rebuild a new infrastructure, more resilient and efficient. And I’m sure there will be even more money, for example, for the AAA (Aqueduct and Sewer Authority) that is currently being negotiated. Municipalities have access to money from FEMA (Federal Emergency Management Agency) to start rebuilding after the hurricanes. It took a long time to get here, like four years, but a part has already been achieved, and now the government will have the money to start working and build the island again ”.

Jaresko addressed in particular the issue of PREPA’s restructuring, an essential step to achieve the transformation of the island’s electricity system, which in turn is a key element in achieving economic growth. Similarly, he expressed optimism that 2021 would be the year in which significant progress would be seen in this process.

“We have to also get PREPA out of bankruptcy, in a separate process. And we have to complete the transformation of PREPA. We have already put the (transmission and) distribution system in private hands, with LUMA. We have already released the RFP (request for proposals) to bring in private operators for power generation. We have to comply with Puerto Rico’s energy policy, and that means that we have to draw up an RFP for the generation of energy from renewable sources, in order to increase the generation of renewable energy on the Island. So, as for to the transformation of PREPA, which is not going to be completed in a year, we will have to achieve substantial progress in 2021, including PREPA’s exit from bankruptcy, ”he said.

On the other hand, to questions from Primera Hora about the process of updating the attendance and payroll system of the Department of Education, where the JSF detected that, due to the lack of an effective automated system, tens of millions had been incorrectly paid to employees who in some cases were no longer even working for the agency, Jaresko commented that significant progress has been made and the result should be seen as early as next month.

“We have made great progress with that. And to be clear, it is not a problem only for the Department of Education, and it has to do with the attendance system being connected to the payroll system, so that when someone does not go to work, and does not strike out, they should not be paid. We are going to try to fix this problem first at the Department of Education, and then at the other agencies. We have made great progress, we are updating that information weekly on our portal, you can verify it. We are putting this new system into operation and I believe that we will be able to fully implement it in January. I hope that we can inaugurate it with the new secretary and that it begins to run for January, so that the payroll for the end of January already reflects an operational assistance system. Once we succeed here, we are going to take it to the other government agencies, to anyone who is not using an automated assistance system, “he said.

Jaresko explained that “one of the reasons why this is important” was seen after Hurricane María, when “we asked the government to publish a report on the attendance of the employees, how many were working, where. And the government, through AAFAF (Financial Advisory Authority and Fiscal Agency), places this report, monthly I believe, and that report says nothing. You can see it on the AAFAF portal. It just says 30%, 40%, maybe 50% of the people are working. They don’t know if the other 50% are working or not. The government’s own report is so incomplete that they themselves don’t know. So it is an important thing that must be done through all government agencies. “

On the other hand, the executive director of the Board admitted that it had not had the same progress with the pilot program that they have with 10 municipalities, in search of more efficiency in the management of municipal finances and the services they offer to citizens.

“There we have had much less progress, due to the elections, the pandemic. There are mayors who are changing, for example, Isabela will not have the same mayor. We have to work harder on this. We have money in the government budget for this year to encourage changes, it is $ 22 million that is available for municipalities that make consolidations. If, for example, they consolidate garbage collection services, or accounting departments, they can access more budget funds to support those consolidations. At the moment no municipality has taken advantage of this, but we know it was a difficult year, with the pandemic, the elections. So we hope that 2021 will bring more success in this municipal effort ”, he concluded.

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