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Puerto Rico oversight board calls for revisions in fiscal plan

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Puerto Rico oversight board calls for revisions in fiscal plan

Puerto Rico's financial oversight board has recommended that Governor Ricardo Rossello revise his proposed fiscal plan to include a $1.3-billion emergency fund and details on structural reforms, Reuters reported Feb. 6.

The federally appointed board, in its Feb. 5 letter to the governor, set a Feb. 12 deadline for the governor to submit a new draft of his plan to turn around the island's economy as it grapples with Hurricane Maria's destruction in 2017 and a combined bond and pension debt of $120 billion.

Rossello submitted a draft fiscal plan on Jan. 24 with a projected $3.4-billion budget gap that would prevent Puerto Rico from repaying debts until 2022. But the seven-member board demanded an emergency reserve of $650 million for the next five years and $1.3 billion within 10 years, "based on best practices for states and territories regularly impacted by storms," said Reuters.

The board also called for more details on key structural reforms, specifically labor. It suggested the governor turn Puerto Rico into an at-will employer and make severance and Christmas bonuses optional.

The board criticized Rossello's plan to reduce capital expenditures to $400 million a year, saying there had "been no project or agency-specific analysis" to support the figure, the news wire reported. The plan should also include expenditure "necessary to maintain assets of the commonwealth," the board said.

The board also asked Rossello to spell out his vision for rebuilding Puerto Rico's decimated energy grid as well as lay out plans for privatizing the bankrupt, quasi-public power utility PREPA.

The board recommended that a plan for the utility should include a five-year financial stability outlook and the creation of an independent energy regulator, the report said.