January 18, 2018 / 1:26 AM / a month ago

Puerto Rico, FEMA still at odds on terms of government loan

NEW YORK (Reuters) - A Puerto Rico official on Wednesday said the U.S. federal government was dragging its feet in letting the beleaguered U.S. territory draw on an emergency loan in the aftermath of September’s Hurricane Maria, threatening essential services.

Gerardo Portela, director of Puerto Rico’s financial authority AAFAF, said in a statement that U.S. officials should hasten to complete ongoing talks with Puerto Rico’s government on the terms and conditions for access to billions of dollars in federal disaster relief.

Public agencies in Puerto Rico, like power utility PREPA and sewer authority PRASA, “face severe liquidity problems that threaten essential services ... if immediate action is not taken,” Portela said in the statement in Spanish.

The comments highlight mounting tension between locals who feel Puerto Rico is not getting the attention it needs from federal authorities, and authorities concerned that the island may have more financial resources than it is letting on.

Hurricane Maria, Puerto Rico’s worst disaster in 90 years, hit the island on Sept. 20 last year, killing dozens and knocking out power to all of its 3.4 million U.S. citizens. The storm occurred in the wake of the island government’s bankruptcy which left it facing $120 billion in combined bond and pension debt.

In October, U.S. lawmakers approved a $4.9 billion loan to hurricane-ravaged governments in Puerto Rico, the U.S. Virgin Islands, Texas and Florida, money meant to help maintain basic services, but Puerto Rico has yet to see its share.

Portela’s comments followed a January 9th letter from the U.S. Federal Emergency Management Agency (FEMA), which said Puerto Rico could not begin drawing on the loan because its cash balances are too high.

FEMA’s letter noted Puerto Rico has about $1.7 billion in liquidity, despite island leaders having forecast it to run out of cash by October 31, and that FEMA was negotiating with Puerto Rico on the timing and terms of the loan.

“Funds will be provided ... when the commonwealth’s central cash balance decreases to a certain level,” FEMA said.

Meanwhile, a federally-appointed board overseeing Puerto Rico’s finances announced Wednesday it would meet on Friday to discuss an ongoing probe into reports that Puerto Rico’s government has some $6.9 billion in cash at hundreds of bank accounts.

Such reports are fueling a perception among some authorities and financial stakeholders that Puerto Rico is overstating its economic plight.

For many in Puerto Rico, where the poverty rate hovers near 50 percent and public pensions are nearly insolvent, FEMA’s letter adds to a perception that the island is not getting fair treatment.

The Service Employees International Union, which represents thousands of Puerto Rican workers, called FEMA’s reasoning “unconscionable,” saying in a statement on Wednesday that “Puerto Rican working families continue to be treated as second-class citizens by [U.S. President Donald Trump‘s] Administration and Congress.”

The US Virgin Islands, also a deeply-indebted U.S. territory, has begun drawing on its nearly $300 million share of the emergency loan, but has faced strict repayment terms not traditionally imposed on municipalities on the mainland, namely a requirement to pledge senior liens as collateral. Puerto Rico could face similar terms.

Reporting by Nick Brown in New York; additional reporting by Robin Respaut in San Francisco; editing by Clive McKeef

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below