In the midst of negotiations with the country’s creditors on a new debt adjustment plan, the Fiscal Control Board (JCF) today released the funds available to meet the financial requirements that may arise from the conclusion of the agreement.
The fiscal unity – together with the Puerto Rico Fiscal Agency and Financial Advisory Authority (Aafaf) – announced this today in a press release in which they indicate that the creditors of the government of Puerto Rico have initially provided an analysis of the situation. of Puerto Rico cash and cash available to distribute to creditors.
They indicate that, in accordance with mediation procedures, the board has responded to creditors’ statements with a detailed cash analysis, which includes an analysis of the total cash in Puerto Rico, cash pledged and the minimum cash balances that the government must to maintain.
According to the board, on June 30, 2020 was the total cash and cash equivalents of the public entity $ 24.7 billion. About, $ 15.9 billion of that amount was in the hands of the central government. The $ 8.8 billion remaining belonged to public companies, including the Puerto Rico Electric Power Authority (ESA), the Puerto Rico Aqueduct and Sewer Authority (PRASA) and la University of Puerto Rico (UPR).
According to the JCF documents, $ 5.4 billion of the central government’s cash is limited, too, around $ 3.8 billion of federal funds related to COVID-19. After taking into account some other funds that may not be available, such as unemployment funds, the Council estimated that on June 30, 2020, the government had $ 10.3 billion in unlimited cash.
About $ 6 billion Of that unlimited money is considered money for creditors in the latest proposal for a modified adjustment plan, $ 1.5 billion is allocated to repay payments to retirees who have lost their employee contributions in the system’s government defined contribution plan. 2000 and approx $ 650 million It is reserved for unions, retirees and other claims. The remaining funds were the minimum cash balance for government operations and other critical needs, such as interim financing in disasters.
Limited funds include funds received from the federal government or limited by federal law or regulation for specific uses, including funds under the CARES Act; third-party funds held in custody by government agencies or other segregated accounts; and other legally limited funds.
Negotiations between the JCF and the creditors are said to have started after the meeting on 20 November in which they endorsed the presentation of the new adjustment plan to the creditors.
The amended adjustment plan proposes to delete the subordinate bond structure of the Corporation of the Pressuring Interest Fund (Cofina) and replace it with a contingent value instrument (CVI, for its acronym) of up to $ 1 billion, which would only be paid if the sales and use tax (SUT) collection exceeds the May 2020 certified tax plan forecasts. According to the board, the new plan will allocate about $ 6,000 million to creditors and about $ 5,000 million in bonds overall. The amended plan proposal would also apply an 8.5% cut to pensions over $ 1,500 per month.