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Puerto Rico criticizes treasury’s ‘misguided delay’ in loans

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Residents of La Perla, Puerto Rico, work to clear out the debris left in the wake of Hurricane Maria as they await aid from federal agencies. (Carolyn Cole/Los Angeles Times/TNS)

WASHINGTON — Puerto Rico faces a “dangerous financial dilemma” because of the U.S. Treasury Department’s delay in providing billions of dollars of disaster relief, the commonwealth’s governor said in a letter to Senate and House leaders.

Treasury’s “misguided delay and policy decisions contrary to Congressional intent” for the community disaster relief program have created a risk that the island’s electric, water and sewage facilities could shut down in the near term, Puerto Rico Governor Ricardo Rossello said in a nine-page letter dated Feb. 26 to Republican and Democratic leaders.

Treasury reduced the size of a proposed loan to Puerto Rico to $2.07 billion from $4.7 billion on Feb. 20, after imposing restrictions that are “seemingly designed to make it extremely difficult for Puerto Rico to access these funds when it needs federal assistance the most,” Rossello said. Contrary to the frequent practice, Treasury “indicated” that it does not plan to forgive the loan, according to the letter.

About 90 to 95 percent of community disaster loans, or CDLs, are forgiven, according to former Treasury officials.

Puerto Rico officials have been negotiating with the Trump administration to access the community disasters loans since Congress in October approved $4.9 billion of CDLs for Puerto Rico, the U.S. Virgin Island and municipalities in Florida and Texas after hurricanes struck those areas last year. Puerto Rico was to receive $4.7 billion of the $4.9 billion

The commonwealth had $1.6 billion of available cash as of Feb. 9, according to the island’s Fiscal Agency and Financial Advisory Authority. Governor Ricardo Rossello has requested the loan be dispensed once the island’s cash slips to between $800 million and
$1.2 billion.

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