Debt Refinancing Plan
SAN JUAN, Puerto Rico (AP) The SAN JUAN, Puerto Rico (AP) Puerto Rican citizens had the chance on Tuesday to express their fears about a huge debt refinancing program before a judge who has the authority to determine the economic outlook of Puerto Rico.
After months of fighting between economists, lawyers and bondholders gave retirees as well as housewives to express their concerns about how the proposed plan could stifle small businesses, cut pensions and bring more pain for an American territory that has experienced many years of economic stagnation. Many expressed fears that, despite the pressure, more drastic reductions in the amount owed to creditors will be needed to prevent Wisconsin bankruptcy from occurring and further financial hardship.
Largest Municipal Bankruptcy
The evidence in a San Juan courtroom came more than six years after the island declared it was insolvent to pay more than 70 billion debt, which was accrued through decades of poor management as well as corruption and over-borrowing and four years after it filed for the largest municipal Wisconsin Bankruptcy case in U.S. history.
Wanda Alabarces, a 75-year-old widow living in San Juan, complained to Judge Laura Taylor Swain that the debt was accumulated illegally by the “vile” government and required to be confirmed. “We aren’t sure the amount we’re paying,” she said in testimony that was also broadcast on the internet and via phone.
The plan would cut the debt from $ 30.5 billion down to 7.5 billion, which would allow that the state to issue 10 billion of new debt, and also allocate $7 billion of cash in bonds to holders that haven’t been paid for more than five years. The plan will wipe out more than 1.3 billion due to contractors, suppliers to the government and other entities according to business leaders, which could force businesses to shut down. The plan is a change from an earlier plan to cut pensions however, it will not allow cost-of living adjustments. Pension benefits for current employees of the government will be in a frozen state. People who have invested in their retirement with the purchase of Puerto Rican government bonds would only receive pennies per dollar they owe.
“Your decision to make, Judge Swain is the sole thing that will save our communities and families from suffering and sorrow,” said Alana Feldman is the daughter of a police officer and teacher in the central mountain town of Adjuntas. Feldman claimed that the mother of her father, who gets approximately $ 500 per month in pension benefits as an educator who retired and has lost around 20 pounds over the past few years due to “the everyday burden of having to decide to purchase protein or drugs “.
Annette Jimenez de Vega Baja mother of three children, has said she was worried that the plan could cause Puerto Rico to a second bankruptcy, with the cost being placed “on the tired burden of those same population.” “We would like to get out of the bankruptcy process however it can’t be done by stealing us away or making us go into poverty,” said Jessica Ortega the school’s principal. “We are already in the poverty of our community.. The judge noted that, even though the law demands him to consider a variety of aspects into consideration, “hearing the pain, the hopes and hopes of today is extremely important for the judge.”
Puerto Rican economist Jose Caraballo-Cueto declared that his clients that the proposal was “not feasible,” saying in a letter to the judge that Puerto Rico would face another restructuring process in the near future. “A high chance of a default in the future means the odds of regaining access on the credit marketplace,” Caraballo-Cueto wrote.
The supporters say this plan is vital for ending the bankruptcy of Puerto Rico and have noted that creditors have agreed to substantial concessions. The plan would cut government debt repayments by 25 cents per dollar of fees and taxes up to 7.2 cents, as per David Skeel, chairman of the federal control board that manages the finances of Puerto Rico and drawn up the plan.
“This is an extremely significant event to Puerto Rico. … It is clear that conclusion of this chapter will be an incredible event to Puerto Rico, especially if it leads to a significant reduction in the future payment to creditors. It will also pave the way for the opening of financial markets and assures that future governments. Will never repeat these same mistakes that led to the bankruptcies “he has written recently for the Puerto Rico newspaper El Nuevo Dia.