The PROMESA automatic stay on bondholder debt collection litigation expired at midnight last Monday night and there is still no word on whether or when Governor Ricardo Rosselló Nevares would petition the Fiscal Oversight Board (FOB) to enter into Title III restructuring. Title III is a court supervised bankruptcy-like process that could force creditors to take steeper losses than they would probably have to take under voluntary agreements, such as Title VI of PROMESA. The Governor has consistently claimed he would rather enter into consensual agreements but has yet to convince enough creditors to enter into forbearance agreements, let alone full-fledged renegotiation deals.
Among the creditors that have already filed suit are several Sales Tax Corporation Fund (COFINA in Spanish) bondholders. One of the COFINA groups filed suit challenging the recently approved Fiscal Plan, which among other provisions, allows the government to use some of the sales tax revenues for purposes other than paying COFINA creditors. Another suit was filed by Ambac Assurance Corporation, one of the main insurers of Puerto Rico’s debt instruments.
Congress approves $296 million to shore up the Island’s Medicaid program
As part of an agreement to prevent a federal government shutdown, Congressional leaders announced that the omnibus spending legislation will include desperately needed funding to keep Puerto Rico’s Medicaid program afloat. The $296 million in additional money for the “Mi Salud” or My Health, program falls short of the $900 million that the HHS Secretary Tom Price said was needed to prevent the program from collapsing. The funding announcement is welcome news after several tweets sent by President Donald Trump last week were suggesting that he considered such funding to be a “bailout,” and accused Democrats of threatening a shutdown over the funding.
The Affordable Care Act (ACA or Obamacare) temporarily increased Medicaid funding for Puerto Rico by $1.2 billion in yearly extra funding and is set to expire by October of this year, which could leave more than 500,000 Puerto Ricans without health insurance and complicate the Island’s delicate financial situation even further. Congressional leaders said they would attempt to allocate more funding during the reauthorization legislation for the Children’s Health Insurance Program (CHIP) that is expected to be approved in September.
Three forums in Washington this week on fiscal crisis
Since the May 1st deadline has passed, three major organizations will hold forums in the nation’s capital this week to discuss the ongoing issues surrounding Puerto Rico’s fiscal and economic crisis.
Yesterday, House Democrats on the Natural Resources Committee, and the Congressional Hispanic Caucus, held a forum focusing on the humanitarian effects of the Island’s financial woes.
Today, the American Enterprise Institute (AEI) will host a discussion on Puerto Rico’s ongoing economic crisis, which will have as panelists FOB Chairman José Carrión; former Counselor to Treasury Secretary Jacob Lew, Antonio Weiss; Andrew G. Biggs, from AEI – who is also a member of the FOB; former IMF top economist Anne Krueger, who wrote a comprehensive report for former Governor Alejandro García Padilla on the dire financial straits facing Puerto Rico; and AEI’s Desmond Lachman.
The final forum this week will be held on Thursday by the Congressional Hispanic Leadership Institute (CHLI) on the impact of federal tax reform on Puerto Rico. Opening remarks will be made by Puerto Rico Resident Commissioner in Congress Jenniffer González (R-PR), and Congressman Daren Soto (D-FL). Panelists include: Pete Sepp, President of the National Taxpayers Union (NTU); Iván Román of the Pharmaceutical Industry Association of Puerto Rico (PIA); and the Honorable Roxana Cruz-Rivera, Deputy Secretary of Puerto Rico’s Treasury Department. The panel will be moderated by Mr. Maximiliano Trujillo, who is a former Senior Policy Advisor for Congresswoman Nydia Velázquez and is President of MJT Policy LLC.