Puerto Rico’s public workers should not worry about getting their paychecks as the government will keep paying them, at a cost of $250 million every 15 days, the commonwealth’s House Speaker Jaime Perello said Wednesday.
A key bill that has secured legislative passage and that is expected to be signed into law this week will boost the island’s cashflow for its operations by allowing it to raise $400 million in Tax & Revenue Anticipation Notes (TRANs). The government will raise the cash for the notes from three public insurance corporations.
“Public employees should have no concerns that we would have problems meeting payroll. It’s not even on the table and it wasn’t even discussed today with the governor,” the House speaker said. Perello added that the government is not expecting any disruption to its operations.
The Caribbean island was sent into turmoil earlier this week after the governor, Alejandro Garcia Padilla, said he wanted to restructure debt and postpone bond payments to solve the island’s fiscal crisis.
Government officials have said Puerto Rico needs about $1.2 billion in cash to operate during the first months of fiscal 2016, which began July 1.
The TRANs measure also calls for suspending monthly payments set aside for general obligation debt in the event the commonwealth fails to either secure the necessary short-term liquidity or a $2 billion bond deal backed by a petroleum-products tax.
Earlier on Wednesday, Puerto Rico made payments of around $1 billion to creditors due on July 1, alleviating fears of an imminent default.
Government Development Bank President Melba Acosta said Tuesday that besides the $400 million in TRANs from the public corporations, the commonwealth was also discussing with private banks a short-term financing transaction of about $400 million.
Acosta said “this could take more time, we are in negotiations.” She added that an arrangement was reached with the public retirement systems that would allow the government to receive some funds at the beginning of the year rather than later on, as is typical.
“All the measures related to the commonwealth’s budget, including the TRANs bill, will be approved by the governor,” Perello said.