US-Imposed Puerto Rico Oversight Board Orders Furloughs


Puerto Rico’s U.S.-appointed financial oversight board said on Friday that it will institute a two-day per month work furlough for government employees, but Governor Ricardo Rossello said he will not “accept or execute.”

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The plan, which originally envisioned a four-day per month furlough, is set to begin Sept. 1 and last throughout the 2018 fiscal year. The plan would exclude frontline law enforcement personnel, Reuters reported. 

The board, a creation of the 2016 federal Puerto Rico "rescue" law known as PROMESA, is tasked with managing the finances of the island, which is seeking to restructure roughly US$72 billion in debt.

As an effort to achieve US$218 million in savings, the furloughs are part of the board’s efforts to implement fiscal changes and achieve US$880 million in savings for "right-sizing" the government this fiscal year. Critics, however, affirm that the efforts promote neoliberal austerity policies, cutting funding for important public infrastructure and social services.

If sufficient savings are achieved per the government’s fiscal plan, furloughs could be scaled back or eliminated early, the board said. 

However, Rossello openly challenged the board’s authority to impose the belt-tightening measure in Puerto Rico. In a statement released by his office, he claimed that public sector cutbacks and budgetary savings resulted in higher-than-expected financial reserves.

"I do not accept nor will I execute the furlough submitted today by the Financial Oversight and Management Board," Rossello said.

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Rossello added that Section 205 of the PROMESA law means the board can make "recommendations" but not impose changes. Furloughs would represent a US$340 million hit to the economy in the current fiscal year, he added.

"Activating our economy and stimulating the creation of more and better jobs in Puerto Rico must be a common objective, both for the government and for the Financial Oversight and Management Board," Rossello said.

Since the establishment of the board, there had been no major public disagreements with the government. Both the board and the government have been criticized by representatives of Puerto Rico’s bondholders.

"To the members of the Financial Oversight and Management Board, I encourage you once again to take the path of good judgment and prudence, instead of the path towards an unnecessary confrontation," Rossello said on Friday.


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