A top Puerto Rican official told Speaker Paul Ryan on Monday that the island is nearly done putting together a comprehensive collection of financial documents to help guide Congress in crafting a debt-relief plan for the island.
Gov. Alejandro García Padilla sent Ryan (R-Wis.) a working draft of 2014 financial information ahead of the completion of a sweeping audit of those records.
{mosads}He also tried to dispel what he called a “misconception” that the island has failed to turn over timely documents detailing the territory’s struggles to avoid a significant default.
“The depth of our debt crisis has been extensively disclosed,” García Padilla wrote.
“Our debt is unsustainable and a broad restructuring of our debt is inevitable,” he said.
A full account of the statements should be released by April, although, by gauging the severity of the island’s fiscal woes that timetable could be altered, he said.
“The delay in completing the financial statements is due precisely to the complexities posed by our current fiscal crisis,” he said.
“I can assure you that we are diligently working to complete the financial statements as soon as possible.”
García Padilla said that the financial information is being made available prior to the completion of the audit “in addition to an unparalleled amount of verifiable financial information that has been released in recent months to provide you with further information that could be useful in evaluating” the island’s financial condition and “new federal restructuring legislation needed to comprehensively address the Commonwealth’s immediate debt crisis.”
He argued that the draft makes clear “the commonwealth currently faces a severe fiscal and liquidity crisis, the culmination of many years of significant governmental deficits, a prolonged economic recession that began in 2006, high unemployment, record outmigration and high levels of debt and pension obligations.”
In 2014, the island’s deficit increased to $49.2 billion from $46.7 billion, he said.
Ryan has given the House an deadline for the end of March to find a solution.
There are two House hearings this week that will examine the topic.
“The issue is whether the restructuring will occur under a broad legal framework and in an orderly manner or without any legal guardrails and chaotic,” García Padilla wrote.
He argued that any failure by Congress to move forward to enact a broad restructuring framework will cause years of legal challenges against the island and among creditors “that will harm the government’s ability to provide essential services, accelerate outmigration to the U.S. mainland, further contract the Puerto Rican economy and severely impair creditors’ ability to recover on their claims.”
“Without the rule of law, 3.5 million American citizens in Puerto Rico face an ever more uncertain future,” García Padilla wrote.
Recently, Senate Finance Committee Chairman Orrin Hatch (R-Utah) called on Puerto Rico to provide updated financial statements saying it had been challenging to acquire recent verifiable information about the island’s fiscal condition.
Earlier this month, President Obama proposed in his $4.1 trillion fiscal 2017 budget to provide Puerto Rico with billions of dollars in relief, in addition to allowing the territory to declare bankruptcy on some of its debt.
In January, Puerto Rico and its top advisers urged Congress to allow for a comprehensive restructuring of about $49 billion of its total $72 billion in debt.