Madagascar Development

Last year, Congress passed a fiscal stability package for Puerto Rico known as "PROMESA." Among other things, it set up an oversight board and empowered a refinancing of Puerto Rico's crushing debt burden. As reported today in Reuters , negotiations continue with one class of bondholders--those connected to the Puerto Rican electricity utility known as "PREPA." The outcome of those negotiations could have a big effect on the future of the island in general, not just on debts. Getting the island's fiscal and debt policies right is instrumental in avoiding a taxpayer bailout of the island and even has a relationship to the tax reform debate in Washington. What's going on with PREPA? The former governor of Puerto Rico negotiated a debt settlement with PREPA that is widely considered (by both current governor Ricardo Rosello and the oversight board) as too favorable to the utility. This in turn creates a bad atmosphere for renegotiating the rest of th...

Puerto Rico's financial oversight board was a central part of last year’s  PROMESA  bill, a law passed in the U.S. Congress that allowed the commonwealth to avoid defaulting on billions of dollars in bond payments for a time. The board's revised plan,  announced Monday , calls for austerity measures and big cuts in public spending. The plan includes cuts to the University of Puerto Rico, a reduction in pension benefits and a $550 million reduction in the island's annual health care budget. The health care cuts could carry large consequences, as more than half of the island’s population is on government-provided health care. Hector Cordero-Guzman , a professor at City University of New York's Baruch College, said Washington, D.C.'s consideration of the island in Congress and in the courts is as important as the plan itself. RELATED:  Not even bankers can predict Puerto Rico's fiscal future How a debt crisis is affecting San Juan, Puerto Rico Would a ...