'PROMESA Is A Tragedy': Pablo Hernández Rivera Shreds Puerto Rico Bankruptcy Law

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During a House Natural Resources Committee hearing before the Congressional recess, Resident Commissioner of Puerto Rico Pablo Hernández Rivera spoke about the Puerto Rico Oversight, Management, and Economic Stability Act.

Transcript

00:00The gentleman's time has expired. At this time, the chair recognizes the resident commissioner

00:04from the Commonwealth of Puerto Rico, Mr. Hernandez, for five minutes. Mr. Hernandez.

00:08Thank you, Mr. Chairman. This hearing feels like a celebration of PROMESA,

00:12and I would like my colleagues not to lose sight of the fact that PROMESA is a tragedy.

00:16It is a tragedy for Puerto Rico. It is a tragedy for the United States and for the values that

00:21this nation is supposed to stand for. For a quarter of my life, my vote and Puerto Rico's

00:27self-government has been shackled by PROMESA, has been shackled by La Junta. We have an

00:33oversight board, a body of unelected officials, overriding decisions of Puerto Rico's elected

00:39leaders. I think most Puerto Ricans have two concerns when it comes to La Junta. Number one,

00:46that its decisions regarding Puerto Rico's bankruptcy don't increase the cost of living,

00:51and as it relates to the PREPA's litigation, I think my colleagues have done a great job of

00:57summarizing those concerns. The second concern is the board's longevity. So this longevity

01:05is a failure of public policy with many culprits. Congress is responsible for not exercising sufficient

01:12oversight. Puerto Rican politicians across all parties, including my own, are responsible for

01:19chronic fiscal irresponsibility. And the board, well, the board has imposed austerity, raised the cost

01:26of living, dragged out PREPA's bankruptcy, and it has enriched consultants who have no incentive for

01:31the board to seize its functions. Mr. Mujica, Congress promised the board would cost under $400 million

01:38in 10 years. Can you tell me how much the board has actually spent during this period?

01:47The restructuring overall has cost over, and I think just the CBO estimate actually said that it

01:54would be done in the first two years, and then it would end after four consecutive years. So the

02:00reality is that it has taken much longer, and it's taken much longer partially because the government

02:05resisted the reforms. You had Hurricane Maria, you had the hurricanes, you had, I'm sorry, you had

02:12Hurricane Maria, you had earthquakes, you had COVID, all of these things intervening, and the government

02:18actively resisting.

02:19I'm sorry to interrupt because we have limited time. What's the amount?

02:22The total amount is about $1.4 billion is the cost of the restructuring.

02:26But we've heard about consultants costing over $2 billion.

02:31The restructuring is cost about $1.4 billion. That's not all consultant costs. That it would

02:35also include the numbers, the cost of the actual board itself, the board staff, but let's be clear.

02:41Okay, so it's more than five times what Congress estimated this would cost. You understand that this

02:46is creating a lot of distrust in Puerto Rico because it appears that, especially when it comes to the

02:50excessive spending on consultants, the board is imposing austerity on the people of Puerto Rico,

02:55but then when it comes to its own expenses, it's not setting an example.

02:59Yeah, let's be clear. The board has saved the people of Puerto Rico over $60 billion. $60 billion

03:06that the elected officials of Puerto Rico incurred. 16 consecutive years of unbalanced budgets, 16 consecutive

03:13years of borrowing money, and that resulted in the reductions and the things that had to be done.

03:20Those things were done because of PROMESA, because of the actions of the board.

03:22You are imposing austerity on many agencies, on many people, and not exercising it yourself.

03:27Section 209 sets clear conditions for the board's departure. We've spoken a lot about that today.

03:32Puerto Rico hasn't had one balanced budget since the board arrived in 2016. I understand we just

03:37approved one, but we have to wait and see if it actually stays within budget by the end of the year.

03:41Who decides if the budgets meet the required accounting standards? Is it the board?

03:45We will look at the audited financial statements. The last audited financial statements that we have

03:51are from 2022. Hacienda, the government pays for it, the government does it through KPMG,

03:58and that last report says that the 22 budget was not balanced under modified or cool.

04:02Okay, so nine years, zero balanced budgets. That is a big failure. Who is responsible for this?

04:08Is it the board's fault or is it the government's fault?

04:11It's the government's. It's the government's fault. The tools and the mechanisms for the

04:15board to leave are within the hands of the government.

04:20I think you are both to blame, but I agree. The government hasn't delivered responsible budgets,

04:25and the board, well, I feel that the board hasn't provided the leadership that we need.

04:30It's been almost a decade. Can you provide a roadmap for the board's departure? The people are asking,

04:38¿cuándo se va la junta?

04:39Yeah, and I think this budget is a really good start, and the governor has showed a commitment to

04:46do that, and we are working very hard with it. We are working with the Office of Management,

04:51the Office of Budget within Puerto Rico to build the capacity to do the knowledge transfer.

04:55Can you provide an estimate of time? How many more years are left?

04:59The next four consecutive, the next four years could lead to four consecutive balanced budgets,

05:04and within that time, we should be able to do those reforms. But we need to hold the government

05:08accountable to making sure that those reforms actually happen. And then I can report back in

05:12four years that we've, that we've met those terms. And I agree with you, we need to keep the government

05:17accountable, and I wish the government were present in this hearing so that not just this government,

05:23the previous governments, all from the same party, have failed the people of Puerto Rico,

05:28and ending the oversight board's tenure in the island. Thank you, Mr. Chairman.

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