Puerto Rico’s only electric company, owned and operated by the government, has filed for bankruptcy and opened the door to violation of the Constitution. Fundación Libertad, an Atlas Network partner based in San Juan, Puerto Rico, has been covering the issue.
Prior to filing for bankruptcy, the Puerto Rico Electric Power Authority (PREPA) was offered a restructuring agreement that would save the government $2.2 billion. The seven-member, unelected federal board known as PROMESA, however, rejected the agreement unanimously. The board’s choice to reject restructuring leaves the door open for violation of Puerto Rico’s Constitution, which stipulates that debt liabilities must be paid before government funds are used for other purposes. Filing for bankruptcy means that there will not be enough in the budget to service the debt. This leaves creditors short of what is owed while Puerto Rico attempts to clear the balance sheet.
Fundación Libertad is a libertarian think tank working to minimize government and maximize freedom. Fundación Libertad’s research analyst Ojel Rodriguez gave comment on the PREPA issue in a recent Wall Street Journal article, “Puerto Rico’s Broken Promesa.”
“The government has defined most of the budget as essential services, meaning that any serious restructuring of the island’s finances amounts to basically reducing [debt service] . . . often directly in conflict with Promesa and the Puerto Rican Constitution,” Rodriguez wrote in a March post co-authored with his colleague Andresen Blom.
In the Wall Street Journal article, Rodriguez is further quoted as saying that rather than cutting expenditures, the government is now “passing the buck to hard-pressed taxpayers.”
According to Joe Milligan, head of development for Fundación Libertad, “Fundación Libertad has recommended wide-sweeping privatization of these entities both to improve service to the consumer and to help with the fiscal situation.”
Fundación Libertad was awarded a grant by Atlas Network. With the help of this grant, Fundación Libertad will host its first Puerto Rico Freedom Forum, which will focus on the World Bank’s ease of doing business index, as well as launch the organization into the public sphere.