Natalie Jaresko, the executive director of Puerto Rico's financial oversight board, has announced her resignation, effective April 1.
Jaresko's exit comes after a federal judge approved a restructuring plan that reduces the largest portion of the U.S. territory’s $70 billion public debt. The plan cuts part of the debt, about $33 billion, to roughly $7 billion — significantly reducing annual repayments to bondholders who own Puerto Rico’s debt, to $1.15 billion.
“I am leaving the Oversight Board at a time of recovery and stability," Jaresko said in a statement. "I am confident that the road that led us to this milestone will take Puerto Rico further to growth and prosperity."
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Puerto Rico’s $70 billion public debt was issued by more than a dozen local government entities and public corporations, as well as the public employee retirement system. The local government then declared its debt “unpayable“ in 2015 following decades of mismanagement, corruption and excessive borrowing.
The declaration prompted Congress to create the 2016 Promesa law under the Obama administration because U.S. laws arbitrarily excluded Puerto Rico from the federal bankruptcy code. The law put in place the federal financial oversight board and created a mechanism for the territory to restructure its debt in federal court.
Jaresko joined the board in 2017 as Puerto Rico embarked on what has become the largest bankruptcy proceeding in U.S. history.
Since then, the financial oversight board has been in charge of overseeing all of Puerto Rico's debt renegotiations, a process that has resulted in tough austerity measures as Puerto Rico tried jump-starting its economic growth.
Jaresko previously worked for the U.S. Department of State, served as Ukraine's finance minister, and was a founding partner at the Horizon Capital private equity fund.
According to David Skeel, chairman of the financial oversight board, Jaresko “served as the principal negotiator for Puerto Rico’s historic debt restructuring.”
“I was heartbroken when Natalie Jaresko told me it was time for her step down," he said in a statement. "I am grateful for the incredible work she has done."
While members of the board have praised Jaresko's role in restructuring Puerto Rico's debt, some critics are still concerned that the Puerto Rican government may be unable to meet future debt service payments if the economy doesn’t do as well as projected, potentially resulting in more austerity measures.
“If that growth is not as expected, for whatever reason ... things will be a little tight financially,” Sergio Marxuach, a policy director at the Puerto Rico-based nonpartisan think tank Center for a New Economy, previously told NBC News, in Spanish.
Whoever is hired as Jaresko's successor will likely have a hand in resolving the restructuring processes for debts owed by the Puerto Rico Highways and Transportation Authority and the Puerto Rico Electric Power Authority, which holds about $9 billion in debt, the largest of any public corporation.
The board has said it hopes to finalize both debt restructuring processes this year.
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