Committee on Natural Resources U S Hous

Discussion Draft, H.R. ___, "Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA)" Committee on Natural Resources U S Hous

The fiscal situation in the Commonwealth of Puerto Rico is dire. The island has managed to accumulate $72 billion of unsustainable debt and a pension liability of over $40 billion. Additionally, the average citizen on the island makes $19,000 per year - 60% less than the median income of the United States. These economic realities have led to a flight of 10 percent of the population away from Puerto Rico to the continental United States. Recent incidents have exacerbated the fiscal crisis on the island. On April 6, 2016, Puerto Rico's Governor Padilla signed legislation authorizing him to declare a moratorium on Puerto Rico's debt. This law was precipitated by Puerto Rico's Government Development Bank's (GDB) transfer of funds from government accounts. Essentially, the Governor and Legislature of Puerto Rico have authorized the nonpayment, i.e. a moratorium, on debt service payments for Puerto Rico, the GDB, the Economic Development Bank for Puerto Rico, and "any remaining instrumentalities." For too long, Puerto Rico has enabled poor fiscal decisions by having limited oversight and transparency within its governmental structures. Evidencing this is the failure of Puerto Rico to produce any audited financials for the past two fiscal years. In turn, credit rating agencies now view the economic health of Puerto Rico to be on par with Greece's. These economic realities faced by Puerto Rico, coupled with the recent legislation passed by the Governor, demonstrate the immediate need for an independent body to oversee Puerto Rico's fiscal activity.