Thu, Mar 01, 2018 - Page 6 News List

US cuts Puerto Rico relief loan by more than half

AP, SAN JUAN, Puerto Rico

Puerto Rican Governor Ricardo Rossello on Tuesday said that the US Department of the Treasury has cut a US$4.7 billion disaster relief loan available to the US territory by more than half, and demanded help from Congress.

Rossello said federal officials reduced the amount to US$2 billion without providing an explanation nearly five months after the US Congress approved the loan.

He said the move puts Puerto Rico in a “dangerous financial dilemma” and that his administration could be forced to cut some essential services as the island continues to struggle after Hurricane Maria.

“Any material interruption to Puerto Rico’s public services will only exacerbate out-migration of its population to the mainland and further deepen and prolong Puerto Rico’s decade-old fiscal and economic crisis,” he said.

Tens of thousands of Puerto Ricans fled to the US mainland after the storm, which hit as the island was struggling to restructure a portion of its US$73 billion public debt load amid an 11-year recession.

Rossello said it seems the Treasury imposed certain loan restrictions to make it “extremely difficult for Puerto Rico to access these funds when it needs federal assistance the most.”

He also said that Treasury officials told his administration last week that they do not intend to forgive the loan.

Congress in October last year approved the loan to help Puerto Rico recover from the storm, which killed dozens of people and caused up to an estimated US$94 billion in damage. About 15 percent of power customers remain in the dark, and more than 700 families are still living in hotels.

The Treasury late on Tuesday said that it discussed with federal officials and board members on Monday the terms and conditions under which the loans would be offered “to protect federal taxpayer investments, while ensuring funding is available quickly when needed.”

It said Puerto Rico would be able to access funding quickly if its cash balance drops below US$800 million, and that the Federal Emergency Management Agency expects to soon loan up to US$5 million per municipality.

In January, officials with the Treasury and the agency sent Puerto Rican officials a letter saying they were temporarily withholding the loan, because they did not believe the government was facing a cash shortage as it had previously said.

Federal officials said the money would be released via the Community Disaster Loan Program once the island’s central cash balance decreased to a certain level.

Rossello said talks with Treasury officials are ongoing, even as he has asked Congress to intervene.

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