SAN JUAN, Puerto Rico – A federal control board on Friday took over Puerto Rico’s finances and several government agencies for the first time in the U.S. territory’s history in a bid to haul the island out of an acute economic crisis.
The seven-member board met in New York and was briefly interrupted by protesters who yelled, “This is slavery!” and “Stop pillaging Puerto Rico!”
The meeting was livestreamed over the internet following pledges that the board would operate with transparency.
It ordered Gov. Alejandro García Padilla to produce a fiscal plan in two weeks and submit weekly and monthly revenue reports that detail how the government is adhering to its budget.
Members also voted on which Puerto Rico government agencies would come under the board’s oversight. They include the island’s central government, its largest public university, its heavily indebted utility companies, a Government Development Bank that is running out of cash and a public pension system underfunded by more than $40 billion.
“We’re working as quickly as possible,” said José Carrión III, who was elected board president, to reporters after the meeting.
The board was approved by Congress in June and is charged in part with helping restructure a portion of a nearly $70 billion public debt that García Padilla has said is unpayable. Carrión is one of four Republicans on the board, along with three Democrats. Also on the board is a representative of Puerto Rico’s governor who is barred from voting.
García Padilla on Thursday urged the board to make the public pension system one of its priorities. He also requested that the board consider intervening in a trial in which a federal judge is expected to soon rule on whether Puerto Rico will have to pay its debts even though the U.S. legislation signed in June also protects the island from lawsuits through February 2017.
Board members did not comment publicly on that petition.
Puerto Rico has been mired in a decade-long economic slump brought about largely by decades of heavy borrowing. The island has defaulted on several multimillion-dollar bond payments since last year and faces a growing number of lawsuits from creditors trying to recover a portion of their investments. Several government agencies are now operating under a state of emergency that permits withdrawals only for essential public services.
Puerto Rico economist Gustavo Vélez said the board will likely soon seek help from the capital markets to generate revenue.
“If it doesn’t, then it will have to impose severe austerity measures,” he said. “There is no other way to finance the deficit. The government likely will not be able to pay salaries very soon. We’re in a downward spiral.”