In a statement Tuesday, V.I. GOP Chairman John Canegata placed blame for the territory’s recent credit downgrades squarely on Delegate to Congress Stacey Plaskett, alleging Plaskett had claimed a carve out to the Puerto Rico bankruptcy bill would protect the territory.
Plaskett did seek a carve out, saying inclusion in the bill could hurt the territory’s efforts in the bond market. However, there does not appear to be any record of Plaskett claiming the carve out would guarantee good bond ratings and "protect our territory," as Canegata alleges.
Earlier this week, the Fitch ratings agency downgraded over $2 billion in USVI debt, following on the heels of Moody’s Investor Services, which downgraded a smaller portion of USVI debt in June. (See Related Links below)
Along with fast-rising V.I. debt levels and a stagnant economy, Fitch cited concern that the federal government could step in in the future, in a way that might not completely protect creditors. Fitch’s statement said the USVI was exempted from PROMESA (Puerto Rico Oversight, Management and Economic Stability Act), recent federal legislation that allows an oversight board to make decisions concerning Puerto Rico’s debt, but the precedent might mean Congress could include it in some future legislation. (See Fitch Downgrades V.I. Debt in Related Links below)
Plaskett pushed for the USVI’s exemption from PROMESA.
In a statement, issued by spokesperson David Lennox, Canegata said Plaskett has "made legislation she introduced exempting the Virgin Islands from measures in the Puerto Rico relief bill a key plank in her bid for reelection."
"Just as Congresswoman Plaskett failed to get a stamp issued to commemorate the 100th anniversary of Transfer Day, she failed to protect our territory from the ramifications of Puerto Rico debt restructuring despite claiming she did," Canegata said, calling Plaskett "dangerously incompetent.
Asked Tuesday about the PROMESA act and the Fitch downgrade, Plaskett said the legislation was flawed.
“Fitch and other rating agencies’ assessment of PROMESA and their determination to include all the territories as at risk due to Congress’ action to protect bondholders confirms our concerns about the bill’s shortsighted reach by providing payment for debt without giving support to Puerto Rico to generate new revenues," Plaskett said in a statement to the Source.
"PROMESA did nothing to address the root cause of Puerto Rico’s debt much less that of the other territories," she said. “Its function is merely to pay Wall Street and use Puerto Rico as an incubator for Republican policy.”
Plaskett continued, “Under PROMESA, Puerto Rico will have no means of determining how it would pay or restructure its debt. The rating agencies have now seen, in clear terms, what the leaders and people of the Virgin Islands and other territories have known for some time: that Congress does have the ability to determine debt payment restructure and provide real support for the territories when it chooses to take responsibility for it," she said.
Plaskett, in turn, placed blame back on the GOP majority in Congress, saying it "is unwilling to go the extra and most important step to create parity with the other states in critical programs."
She said she hoped the V.I. government would start looking for new ways to generate revenue instead of bond issues.
Her statement Tuesday is similar to what she has said in many interviews with many media outlets before PROMESA’s passage.
"I don’t think this is a bill that will help Puerto Rico recover," Plaskett told the Source in June, before its passage. “I think it is a bill that will allow Puerto Rico not to default on its debt and give it space to restructure its payments. That is all it will do. … But if there is not an equitable treatment of the territories and Puerto Rico, if they are not given the tools to grow their economy, they will eventually end up in the same position again.”
She said at the time that she nonetheless supported the bill, once provisions allowing the USVI to create a similar oversight board and to seek protection from its creditors have been removed.