Disaster Capitalism Comes to Puerto Rico
In the year since Hurricane Maria laid waste to Puerto Rico, the island's already dire economic situation has gotten even worse. And, rather than pursue fiscal reforms and debt restructuring, the commonwealth's oversight board has just certified a program that will permanently weaken the island's economic potential.
NEW YORK – It has been more than a year since Hurricane Maria ravaged Puerto Rico, compounding the agony of a commonwealth that was already caught in an economic downward spiral. In addition to experiencing an out-migration crisis, the island sought what amounted to bankruptcy protection in May 2017. And under the US Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), a federal oversight board now oversees its finances.
Though Maria was a tragedy, it also created an opportunity to rewrite a flawed fiscal plan that had been certified by the oversight board in March 2017. That plan was supposed to restore the island’s economic health while also providing money to creditors who were clamoring for repayment. But the plan was projected to depress economic activity even further, and failed to establish an appropriate basis for calculating how much debt restructuring Puerto Rico would need.
Sadly, the opportunity to right Puerto Rico’s fiscal ship has not been seized. On the contrary, the oversight board recently certified a new fiscal plan and a deal with holders of bonds issued by the Puerto Rico Urgent Interest Fund Corporation (COFINA) that could put the island in a debt straitjacket indefinitely.