(Reuters) - Puerto Rico’s government on Saturday will present a revised plan to turn around the island’s economy after an earlier proposal was rejected by the U.S. territory’s federally-appointed oversight board, a government official said on Friday.
Governor Ricardo Rossello’s draft plan, released last week, had outlined $33.8 billion in spending cuts and new revenues, and projected that Puerto Rico would have $1.2 billion a year to service debt, only about 30 percent of what it owes next fiscal year.
The board, which must approve a turnaround plan for the island under a restructuring law known as PROMESA, on Thursday said the plan was based on overly-optimistic revenue projections, and gave the island until Saturday at 0900 AST (8.00 a.m. ET) to revise it.
Rossello had been non-committal as to whether he would offer a new plan, telling reporters on Thursday he believed his proposal was sound even as he offered to discuss potential changes with the board.
But in an interview with Reuters on Friday, Elias Sanchez, Rossello’s liaison to the board, said the government would submit a revised plan on Saturday morning.
“We have been tweaking the plan ... and we will be adding some additional initiatives in different areas to meet the marks,” Sanchez said. “But we still have great differences with the board’s projections and economics.”
The board’s rejection on Thursday was a setback for Rossello, who was elected in November but has limited room for maneuver under PROMESA, which was passed last year by the U.S. Congress.
The U.S. Commonwealth is saddled with $70 billion in debt and a 45 percent poverty rate, and its population is shrinking as residents flee for the mainland in search of better economic conditions.
The board said Rossello used “overly optimistic” forecasts for economic growth rates and for a return to nominal economic growth.
It also said the projections failed “to reflect near-certain declines in baseline revenues associated with corporate taxes and non-resident withholding taxes.”
Reporting by Nick Brown; Editing by Tom Brown