Puerto Rico Government Agencies
Francisco J. Domenech, Esq, Governor’s Chief of Staff and Executive Director of AAFAF
Puerto Rico Fiscal Agency and Financial Advisory Authority
Puerto Rico Fiscal Agency and Financial Advisory Authority
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Puerto Rico government releases audited financial statements for fiscal year 2022, creates committee for the recovery of Puerto Rico’s credit rating and economic development council.
Please view the attached document.
The Government of Puerto Rico announces the issuance of its FY 2021 Audited Financial Statements. This is the fourth audited financial statement issued in a 2 ½ years and the Government is already working towards the FY 2022 Audited Financial Statements issuance by the end of 2023.
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The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF,” by its Spanish acronym) announced the submission of the Government’s proposed fiscal plan for the Commonwealth of Puerto Rico (the “2023 Fiscal Plan”) to the Financial Oversight Management Board for Puerto Rico (“FOMB”) on January 17, 2023, as required by law. This is the Government’s first fiscal plan submission since the Commonwealth emerged from its Title III bankruptcy case on March 15, 2022, and, if approved, will go into effect July 1, 2023.
“The 2023 Fiscal Plan represents Governor Pierluisi’s vision of a medium- and long-term plan for key revenue, spending, and policy priorities that will further strengthen Puerto Rico’s economy for the benefit of all our stakeholders, principally our People,” said Omar J. Marrero, executive director of AAFAF, in his transmittal letter to FOMB Executive Director Robert F. Mujica, delivered last night.
“Now that the Government has achieved a sustainable debt level and continues to operate within the certified balanced budgets, we are embarking on a new chapter in Puerto Rico’s history where strategic investments and the prioritization of the Governor’s key fiscal policy objectives will shape the future of economic prosperity on the Island. The primary goal of the Government’s 2023 Fiscal Plan is to seize this once-in-a-generation opportunity to leverage our unique financial position as a result of our economic development public policies and the Plan of Adjustment’s success to lay the foundation for Puerto Rico’s future,” Marrero explained in his letter.
The 2023 Fiscal Plan includes several initiatives designed to promote economic development, including, among other things, (i) establishing a Municipal Essential Services Fund to ensure essential services are provided effectively by municipalities for across the Island; (ii) cost-of-living adjustments to mitigate the current inflationary environment; (iii) workforce investments to increase the government’s capacity to deliver services, including salary increases; (iv) prioritizing obligations to current and future retirees; (v) creating a fiscally responsible post-bankruptcy Government by implementing a comprehensive financial management agenda to ensure that Puerto Rico never again suffers from the problems that led to the fiscal crisis in the first place; and (vi) Government efficiency.
Cognizant that the certification of a new fiscal plan is a process that requires collaboration and consensus-building between the Government and the Oversight Board to achieve the best results possible, AAFAF looks forward to continued discussions with the FOMB to reach common goals for the benefit of the people of Puerto Rico.
The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF,” by its Spanish acronym) and the Puerto Rico Public Finance Corporation (“PFC”) announced that the U.S. District Court for the District of Puerto Rico approved the qualifying modification for PFC (the “Qualifying Modification”) under Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) and the Qualifying Modification has successfully been implemented.
“The consummation of the PFC Qualifying Modification represents the settlement of PFC outstanding obligations at a significant discount and allows multiple Commonwealth agencies and public corporations to eliminate the PFC-related debt from their balance sheet. This adjustment is the result of extensive negotiations and the willingness to reach a consensual agreement with all parties,” said Omar J. Marrero Díaz, executive director of AAFAF. “This represents another significant step in restructuring the Commonwealth’s legacy debt and another key milestone for Puerto Rico’s return to the capital markets,” added Marrero.
The Qualifying Modification involves the restructuring of the following bonds issued by PFC: (i) Series 2011A Commonwealth Appropriation Bonds, (ii) Series 2011B Commonwealth Appropriation Bonds, and (iii) Series 2012A Commonwealth Appropriation Bonds (collectively, the “PFC Bonds”). The PFC Bonds are payable solely from payments of principal and interest on certain promissory notes (the “Notes”) issued by certain departments, agencies, instrumentalities, and public corporations of the Commonwealth of Puerto Rico, which Notes are payable solely from budgetary appropriations (if any) made by the Puerto Rico Legislative Assembly.
The Qualifying Modification results in the discharge of the PFC Bonds at a discount of approximately 96 percent (including the DRA bonds, discussed below). The only new economic consideration provided by the Commonwealth or PFC to discharge the more than $1.5 billion of principal and unpaid interest of PFC Bonds is through payment of $13.8 million in cash. The remaining consideration, subject to and as provided under the Qualifying Modification, will be in the form of bonds issued by the GDB Debt Recovery Authority (the “DRA”) in the face amount of up to approximately $47 million, on the terms and conditions set forth in the Qualifying Modification.
The Qualifying Modification will also result in the release of all claims against the agencies and public corporations that issued the Notes. This will allow the Notes liability that is currently carried on the balance sheets of multiple government agencies and public corporations to be eliminated. The Plan’s implementation thus represents one more significant step in returning Puerto Rico to the capital markets.
The restructuring of PFC joins those of the Commonwealth, COFINA, HTA, ERS, GDB, PBA, PRIFA, and CCDA, among others. The Government looks forward to continuing to work constructively to advance the final stages of Puerto Rico’s debt restructuring efforts in the coming months.
Expressions of the Puerto Rico Fiscal Agency and Financial Advisory Authority’s executive Director, Omar J. Marrero, regarding the approval of the Plan of Adjustment for the Puerto Rico Highways and Transportation Authority (ACT, per its Spanish acronym)
“With the approval of this Adjustment Plan, as proposed by the Financial Oversight and Management Board, the ACT’s debt is reduced by more than 80 percent, which is worth over $3 billion in debt service payments. This will allow the ACT to emerge from bankruptcy and establish a secure path for it to improve its fiscal situation, while facilitating investments in infrastructure for the benefit of our citizens”, mentioned AAFAF’s Executive Director, Omar J. Marrero Díaz, while assuring that the approved Adjustment Plan contains positive agreements for the agency.
The governor of Puerto Rico, Pedro Pierluisi and Fiscal Agency and Financial Advisory Authority (AAFAF) executive director Omar J. Marrero, together with Municipal Revenue Collection Center (CRIM) executive director Reinaldo Paniagua Látimer and CRIM Board of Directors Chairman Jesús Colón Berlingeri, announced today that the CRIM and the Government Development Bank (GDB) Debt Recovery Authority (DRA) entered into a settlement agreement that allows them to restructure approximately $131 million in obligations owed by the CRIM, on behalf of the municipalities, to the DRA (as successor entity to the GDB).
The primary source of repayment of this debt, prior to the agreement, was the contribution from the central government to the Equalization Fund. As a result of the gradual elimination of this contribution—pursuant to the Fiscal Plan Certified by the Fiscal Oversight Board—had the CRIM and the municipalities not resolved or restructured this debt, the CRIM’s and the municipalities’ finances could have been severely affected, to the point of impacting their ability to meet their obligations and endangering the rendering of services to the people. The agreement helps reduce the CRIM’s and the municipalities’ total debt burden, since it reduces the debt service and pays off a large part of the outstanding principal.
Governor Pedro Pierluisi said about the agreement, “This settlement represents an important achievement by AAFAF, the CRIM and its Board of Directors, on behalf of all the municipalities, towards improving their financial situation and continuing on a path of fiscal responsibility for the benefit of the people of Puerto Rico. This agreement is consistent with my policy of supporting the municipalities so they can continue to offer the essential services they provide to our people”
The agreement consists of a lump-sum payment of $62.5 million, which comes from collections under the CRIM Tax Amnesty Program, the issuance of two notes in the aggregate amounts of $5.2 million and $26.3 million, payable by the municipalities that did not receive sufficient collections under the Tax Amnesty Program, and forgiving $36.8 million from the total amount owed, equivalent to a 28 percent reduction. The two notes that were issued in the amount of the remaining balance will be payable in three and five years, respectively, at a variable interest capped at 6.25 percent.
Prior to the settlement, amounts owed by CRIM and municipalities totaled approximately $105 million in principal and $25.6 million in interest. These obligations were created pursuant to Act 42-2000, which allowed the CRIM to obtain a loan to cover the deficit that resulted from the payment of excess remittances to municipalities, and to Act 146-2001, which allowed the CRIM to obtain another loan to repurchase certain municipal property tax liens that had been sold to the Puerto Rico Public Finance Corporation in 1998.
“The settlement of these obligations represents yet another example that, whenever legally and financially possible, we will always strive to use the mechanisms available under PROMESA to reach consensual agreements with our creditors and avoid costly and lengthy litigations, all for the benefit of our municipalities and the constituents they serve,” said the executive director of AAFAF, which advised the CRIM since the beginning of the negotiations in 2021.
As a result of the settlement, the municipalities received partial debt forgiveness, which allowed sixty-four of them to fully repay all of their obligations under these loans. In addition, as a result of the CRIM Tax Amnesty Program, the municipalities will receive a total of $124.4 million that will be distributed between the Basic Tax and Additional CAE Funds items.
CRIM executive director Reinaldo Paniagua stated, “The relief obtained as result of the successful implementation of the CRIM Tax Amnesty Program cannot be overstated. Through the collective efforts of many, and the support of our Governing Board, we have not only resolved a substantial amount of debt through this settlement, but we have also been able to realize substantial incremental funding for all municipalities, which will allow them to continue providing essential services to all residents of Puerto Rico.”
The chairman of the Board of Directors of the CRIM and mayor of Orocovis Jesús Colón Berlingeri said: “Through this settlement, we remove yet another cloud of uncertainty about the repayment of these loans and the possible impact on the finances of the CRIM and all of the Island’s municipalities resulting from the Oversight Board’s gradual elimination of the Equalization Fund, which we have and continue to oppose. This settlement also shows that despite the challenges we face on a daily basis, and our disagreements with the Oversight Board’s measures, we are focused and committed to finding responsible solutions, keeping the welfare of all of our stakeholders as our top priority.”
Puerto Rico’s Secretary of State, Hon. Omar J. Marrero, informed today that the Island was chosen as the official venue for the NASS Summer Conference 2024 hosted by the National Association of Secretaries of State (NASS). The decision was announced following a vote by the organization’s executive committee. Puerto Rico’s selection was unanimously ratified by the plenary.
“We are grateful to the National Association of Secretaries of State for the opportunity to host this important meeting in 2024,” Marrero said. “Twelve years ago, NASS held its annual convention on the Island. However, more than a decade has passed and we are eager to showcase Puerto Rico’s transformation. The conference is the ideal scenario for promoting Puerto Rico at a national scale” Marrero added.
“We are excited about the selection of Puerto Rico as the host for this convention. This demonstrates our ability to hold important events such as this one, in which important US state government leaders meet. It also shows how Puerto Rico is positioned as an attractive destination because of the remarkable experiences it offers visitors, thus enriching the event. This could not have been achieved without our Secretary of State, Omar Marrero, who led the effort to position Puerto Rico as the host of the event in 2024,” said Brad Dean, CEO of Discover Puerto Rico.
Thirty Secretaries of State and one Lt. Governor participated of the annual conference held in Baton Rouge, Louisiana, July 7 – 10. The discussions included topics on cyber security, election administration, business services and more. The Conference concluded with the sworn-in of New Jersey Secretary of State, Tahesha Way, as NASS 2022-2023 president.
The NASS Summer Conference is held annually. During the meeting, these executives from different states gather to discuss public affairs, legislative matters, and security initiatives, among others. Furthermore, the Secretaries participate in a variety of sessions where they discuss current initiatives from their respective states. NASS is in charge of developing the event schedule. The agenda will be published closer to the convention date.