The powerful control board established to oversee a restructuring of Puerto Rico’s $69bn debt burden elected insurance executive Jose Carrión III as its chairman on Friday as it set a two-week deadline for the island to submit a turnround plan.
The board, whose first public meeting in Downtown Manhattan was interrupted by protesters vehemently opposed to an entity they see as overly colonial, gave the governor until October 14 to draw up plans to put the US island of 3.5m people on a sustainable fiscal path.
Mr Carrión, who is one of four of the seven-person board members that was born and raised in Puerto Rico, said he would endeavour to be “as transparent as possible” as the group began its work.
The oversight board, which has already received technical briefings in Washington, has to sign off over the island’s finances and will have oversight over the restructuring negotiations with creditors.
Puerto Rico has suffered a series of escalating defaults over the past year under governor Alejandro García Padilla, who is in his final months as the head of the US territory. The island missed nearly $1bn of payments due this July, including on bonds backed with a constitutional guarantee.
Investors have been somewhat content with the appointment of the seven-person control board, made up of four Republican nominees — including Mr Carrión — and three Democratic ones. Richard Ravitch, the former New York lieutenant-governor, serves in place of the governor as an ex officio member and does not hold a vote.
About two dozen protesters gathered outside of the Alexander Hamilton US Customs House where the board met, shouting “shame on you” to members and attendees as they exited.
“As the vast majority of you did, I did not agree either with the excessive powers given to the board nor with several designations to it,” Governor García Padilla said on Thursday as he handed over financial information to the board. “But the truth is we had no alternative.”
Investors and locals have been waiting patiently for the formation of the board with negotiations primarily on hold as the team gets familiarised with the structure of Puerto Rico’s intricate debt stock.
The board agreed that the emergency legislation signed by US President Barack Obama — the Puerto Rico Oversight, Management and Economic Stability Act, or Promesa — gave it purview over the commonwealth, its employee and teacher retirement system, the influential Government Development Bank and the Sales Tax Financing Corporation.
It also plans to establish deadlines for the island’s electric utility and sewer authority, which have $13bn of debt outstanding and have lost access to capital markets, to submit fiscal plans.
Before the passage of the Promesa legislation, Puerto Rico did have not have access to a court-backed restructuring process.