Find out what the implications of the Adjustment Plan are and what should happen next

The approval yesterday, Tuesday, of the Plan of Adjustment (PDA) by federal district judge Laura Taylor Swain It assumes that Puerto Rico is heading for the final stretch to emerge from bankruptcy, after five years of contentious negotiations that, among other things, will guarantee the necessary funds for the government to meet its obligations.

To know specifically what the confirmation of this plan includes and what remains to be done, before it comes into force on March 15, we summarize the most important points below:

What was approved?

– The pensions of some 167,000 public sector retirees remain intact.

– A cash payment of $7,048 million to bondholders of General Obligations, Administration of Public Buildings and Administration of Retirement Systems, as well as new bonuses and additional payments if the economy improves, once the plan enters into force on March 15.

– Puerto Rico will dedicate 7.2 cents of each tax dollar to the payment of the public debt.

– Reduces the remaining debt by 80% and saves Puerto Rico more than $50,000 million in debt service payments during the life of the Plan.

– The compulsory expropriation claims -estimated at $400 million- will be paid in full when determined by a relevant forum.

– Defined pension benefits for active public employees, teachers and judges are eliminated.

– Puerto Rico will be subject to a new debt policy that will be in force for 10 years and that will be tougher than that established in the Constitution.

– About 40 state laws will be occupied by the Promise Law and the PDA until it is paid in full.

What’s next?

– On January 27, the Fiscal Oversight Board will amend the current Fiscal Plan to reflect the provisions of the PDA.

– The Legislature will amend the budget to reallocate the funds in it and include the various payments that will be made. This should happen by mid-February.

– After the PDA is implemented, the central government will be left with some $2 billion in cash in its coffers and resources to invest in infrastructure.

– The Board will continue to meet with the administration of Peter Pierluisi to work on the necessary documentation to implement the PDA.

– The government, particularly the Fiscal Agency and Financial Advisory Authority and the Department of the Treasury, will have to begin the implementation of Puerto Rico’s new debt policy, which will limit the state’s capacity to borrow and invest in infrastructure.

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