San Juan, Puerto Rico – the Puerto Rico Fiscal Agency and Financial Restructuring Authority (PRFAA) announced today, February 29, 2024, a preliminary agreement intended to resolve the ongoing federal government shutdown impacting certain PRFAA functions. the agreement, reached with relevant federal agencies, aims to restore full operational capacity and ensure continued access to critical services.
The partial federal closure, triggered by broader congressional budget disputes, had disrupted PRFAA’s ability to process certain financial transactions and fulfill obligations related to Puerto Rico’s debt restructuring. This posed a risk to ongoing economic stability efforts and possibly impacted payments to creditors, bondholders, and pensioners. The agreement provides a pathway to resume these essential operations while a long-term solution to the federal budget impasse is negotiated.
According to a PRFAA statement, the preliminary agreement outlines a framework for temporary funding and operational adjustments allowing the agency to continue essential functions, including debt service payments and ongoing restructuring processes. Specific details of the agreement remain confidential pending finalization, but PRFAA officials confirmed it involves collaboration with the U.S. Treasury Department and other federal entities.
“We are pleased to have reached this preliminary understanding with our federal counterparts,” said PRFAA Executive Director, José M. Aguero. “This agreement is a critical step in mitigating the disruption caused by the federal government closure and safeguarding the financial stability of Puerto Rico.”
The PRFAA was established in 2016 under the Puerto Rico Oversight, Management, and economic stability Act (PROMESA) to oversee the island’s debt restructuring and fiscal recovery. Puerto Rico filed for bankruptcy in May 2017, burdened by approximately $70 billion in debt. The agency has been working to negotiate with creditors to reduce the debt load and establish a sustainable fiscal path forward. The recent federal shutdown threatened to derail those efforts.
PRFAA officials stated they will provide further updates as the agreement is finalized and implemented. They emphasized their commitment to openness and maintaining open communication with stakeholders throughout the process.
