After lobbying the V.I. Senate for most of the summer to pass his Matching Fund Securitization Corporation plan to provide funds for the Government Employees’ Retirement System, Gov Albert Bryan Jr. announced on Monday that he was suspending the program.
In a statement issued on Monday, Bryan said bondholders were put off by a legal filing in Superior Court.
“Despite the great interest initially demonstrated by potential bondholders, this decision became necessary given the negative impact of ill-intentioned litigation deliberately filed in the Superior Court of the Virgin Islands on the eve of bond pricing and closing,” Bryan said in the statement. Details of the court action were not included in Monday’s statement.
Bryan also cited changes made to the bill on Sept. 18 to the ratifying legislation created uncertainties. The amendments “deprived us of the opportunity to successfully reenter the market and close before the authorization’s sunset date on Sept. 29, as required by law.”
The securitization program was intended to improve cash flow, in part, from reducing the debt service payment of $85 million on USVI bonds due on Oct. 1.
“This was always the critical event that dictated the transaction timeline. That debt service payment is still due on Oct. 1 and will be paid on schedule,” Bryan said.
However, Bryan said the savings on the bond payments would have funded various projects in the territory, most specifically providing a down payment on helping reduce a portion of the deficit of GERS.
“There is a looming 40 percent cut in benefits for almost 8,700 retirees, some of the most vulnerable amongst us, forecast to take effect in January 2021,” Bryan said.
Bryan said the required suspension of the program robs the territory of the chance for a new beginning.
“Simply put, we will continue to pay out millions of dollars towards the government’s debt at full rate instead of taking in millions of dollars at reduced interest rates to accomplish what would have been a fresh start for our economy,” he said. “However, I will work with our financial and legal advisory teams and the Legislature with increased vigor to develop alternative options to try to gain an equivalent amount of savings that can be applied to the same projects within a short timeframe.”
Bryan thanks the majority of the senators, who voted to authorize the program.
“Thank you once again to the majority of the members of the Virgin Islands Legislature, who saw the need to take decisive action in support of this initiative and afforded us the opportunity to pursue these potential savings. I ask for their continued support in these efforts. We are open to recommendations from all senators on how to relieve our long-standing financial burdens, especially to the GERS pension system,” he said.