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09/14/2021 | Organizing for a Just Recovery in Puerto Rico and Beyond

PROMESA Has Failed: How a Colonial Board Is Enriching Wall Street and Hurting Puerto Ricans

Rather than rein in Wall Street speculation, the unelected Board has overseen a slow and expensive debt restructuring process using a bevy of high-paid consultants and lobbyists.
    2021 marks the five-year anniversary of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which created a legal framework for restructuring Puerto Rico’s $74 billion debt and established the Financial Oversight and Management Board (the Board). Although Congress passed PROMESA to provide much-needed relief to Puerto Rico in the midst of a crushing debt crisis, the Board has used its power to impose devastating austerity measures and negotiate unsustainable debt restructuring plans that enrich Wall Street and hurt Puerto Ricans. These two approaches both stunt economic development and growth, and make it very likely that Puerto Rico’s debt will soon become unsustainable again. The unelected and unaccountable Board has failed to deliver on PROMESA’s key mandates of representing the interests of Puerto Rico in the debt restructuring proceedings, and helping Puerto Rico achieve balanced budgets and regain access to capital markets.
    Since 2006, Puerto Rico’s residents have suffered a protracted economic recession. In recent years, the island has been battered by a series of natural disasters as well as the COVID-19 pandemic. Throughout this devastating series of natural and public health crises, the Board has continued to push fiscal plans that: 1) impose harmful austerity cuts, 2) ensure hefty payments to bondholders and Wall Street firms, and 3) take advantage of federal disaster relief funds to secure larger payouts for Wall Street bondholders.