Regarding Mary Anastasia O’Grady’s “Puerto Rico’s Broken Promise” (Americas, May 1): Puerto Rico is facing a dire future. At this stage, that bleak prospect is not only a consequence of decisions made by politicians. More relevant are the actions taken by the members of the Financial Oversight and Management Board, and other people who should know better, who are letting their ideologies and prejudices dictate their behavior instead of a sober reading of the available evidence.
The government of Puerto Rico is facing a liquidity crisis, but it is not insolvent. The logical solution to lack of liquidity is a reasonable reduction in cash outflows together with the use of temporary financing. The Board, however, closed the door to any form of short-term financing, requiring the government to solve the problem solely by reducing disbursements. As such, the Board is forcing a liquidity crisis to become an insolvency crisis. As part of that process, it is unnecessarily imposing significant losses on the bondholders, who remain the only potential providers of financing for temporary cash needs and for the future investments that the Island so desperately needs.
To provide those investment needs, the Board is counting on several projects that it hopes can be developed as public-private partnerships. Unfortunately, most of these projects are not feasible under that development model, so they will remain unexecuted. As a result, Puerto Rico, strapped for cash and devoid of any urgently needed investment, will see its economy plummet to levels never experienced by regions free of wars or natural disasters.
It is time for the Board to reconsider its present course of action.
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Nota: Este escrito fue publicado, como una Carta al Editor, en el periódico The Wall Street Journal, 8 de mayo de 2017, página A18.
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