The Puerto Rican government has asked the US Congress for funding to the tune of $139 billion for reconstruction effort (Mark RALSTON)

Miami (AFP) – Puerto Rico’s governor announced Wednesday the island’s Washington-established financial oversight board had struck an debt restructuring deal with bondholders that would save $17.5 billion in future payments.

Ricardo Rossello’s announcement came hours after his government presented to Congress a $139 billion development and recovery program following last year’s hurricanes, which devastated the US territory.

In a statement, Rossello’s office said the oversight board had agreed with a significant number of bondholders — “in principle” — to restructure Puerto Rico Sales Tax Financing Corporation (COFINA) debt “to terms that are aligned with the fiscal reality of Puerto Rico.”

The agreement would save Puerto Rico $17.5 billion in payments to bondholders.

“This agreement represents a significant step in restructuring Puerto Rico’s debt and reaffirms once again the credibility of our efforts,” said Rossello, quoted in the statement. 

The most recent operational report from the Puerto Rican government, dated December 2016, said that COFINA had issued all of its $17.3 billion in bonds between 2007 and 2011.

Soon after, in May 2017, Puerto Rico declared itself bankrupt, with public debt surpassing $70 billion.

Four months later, hurricanes Irma and Maria ruined the island’s infrastructure, above all its electricity, plunging Puerto Rico into crisis.

On Wednesday, the Puerto Rican government asked Congress to allocate funding to the tune of $139 billion for reconstruction efforts, including rebuilding homes, water and energy systems, and rehabilitating services such as health, education and transport.

“All of the initiatives aim to make us stronger and more resilient, while guaranteeing long-term economic recovery,” said the governor. 

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