Puerto rico government

Puerto Rico’s financial advisory chief resigns

Natalie Jaresko, executive director of Puerto Rico’s financial oversight board, announced her resignation, effective April 1.

Jaresko’s exit comes after a federal judge approved a restructuring plan that cuts most of the US territory’s $70 billion public debt. The plan reduces a portion of the debt, about $33 billion, to about $7 billion, dramatically reducing annual repayments to bondholders who hold Puerto Rico’s debt, to $1.15 billion.

“I am leaving the Supervisory Board at a time of recovery and stability,” Jaresko said in a statement. “I am confident that the road that has taken us to this important milestone will take Puerto Rico further towards growth and prosperity.”

Puerto Rico’s $70 billion in public debt was issued by more than a dozen local government entities and public companies, as well as the public employee retirement system. The local government then declared its debt”unpayablein 2015 after decades of mismanagement, corruption and excessive borrowing.

The statement prompted Congress to create the Promesa Act of 2016 under the Obama administration because US laws arbitrarily excluded Puerto Rico from the federal bankruptcy code. The law established the Ffederal commission for financial supervision and created a mechanism for the territory to restructure its debt in Federal Court.

Jaresko joined the board in 2017 as Puerto Rico embarked on what has become the largest bankruptcy proceeding in US history.

Since then the financial supervisory board was put in charge of overseeing all of Puerto Rico’s debt renegotiations, a process that resulted in harsh austerity measures as Puerto Rico attempted to revive its economic growth.

Jaresko previously worked for the US State Department, served as Ukraine’s finance minister and was a founding partner of the private equity fund Horizon Capital.

According to David Skeel, Chairman of the Financial Oversight Board, Jaresko “has been the primary negotiator for Puerto Rico’s historic debt restructuring.”

“I was heartbroken when Natalie Jaresko told me it was time for her to step down,” he said in a statement. “I am grateful for the incredible job she has done.”

While board members have praised Jaresko’s role in restructuring Puerto Rico’s debt, some critics still fear that the Puerto Rican government may be unable to meet future debt service payments if the economy is not doing as well as expected, potentially leading to more austerity measures.

“If this growth is not as expected, for whatever reason … things will be a little tight financially,” Sergio Marxuach, policy director for the Puerto Rico-based nonpartisan think tank. Center for a New Economypreviously told NBC News, in Spanish.

Whoever is hired as Jaresko’s successor will likely have a role to play in resolving debt restructuring processes owed by the Puerto Rico Highways and Transportation Authority and the Puerto Rico Electric Power Authority, which holds approximately $9 billion in debt, largest of all public corporations.

The board said it hoped to finalize both debt restructuring processes this year.

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