EXHIBIT 22 

Case:17-03283-LTS Doc#:3126-22 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

Exhibit Letter from FOMB to Governor (6/16/17) Page 1 of 5
PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

FINANCIAL OVERSIGHT AND MANAGEMENT BOARD

 FOR PUERTO RICO

 Members

Andrew G. Biggs

Carlos M. García

Arthur J. González

José R. González

Ana J. Matosantos

David A. Skeel, Jr.

 José B. Carrión III 

Chair Natalie A. Jaresko

Executive Director

BY ELECTRONIC MAIL

June 16, 2017

Honorable Ricardo A. Rosselló Nevares

Governor of Puerto Rico

La Fortaleza

PO Box 9020082

San Juan, PR 00902-0082

Honorable Thomas Rivera Schatz

President of the Senate of Puerto Rico

Honorable Carlos J. Méndez Núñez

Speaker of the House of Representatives

 of Puerto Rico

Dear Governor Rosselló Nevares, Senator Rivera Schatz, and Speaker Méndez Núñez:

As we continue to move towards our common goal of achieving an Oversight Boardapproved and certified Commonwealth budget for fiscal year 2018 by June 30, 2017, I 

write to you out of concern that some of the progress we appeared to have made in the past 

few weeks as a result of the close and positive collaboration between the Board and the 

administration—and their respective teams of advisors—may be receding, and that the 

necessary resolve to attain the goals set forth in the certified fiscal plan may be waning.

It is equally of concern that some of the narrative taking hold in the public discourse fails to 

characterize adequately the truly dire fiscal situation the Commonwealth is facing, thus

leading the public to underestimate the true nature and impact of some of the fiscal 

responsibility measures mandated in the fiscal plan and that, accordingly, will have to be 

incorporated in the budget. Stability can only be earnestly projected if the people know and 

understand the reality of Puerto Rico's fiscal situation and the serious steps being 

undertaken to address it.

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Exhibit Letter from FOMB to Governor (6/16/17) Page 2 of 5
Honorable Ricardo A. Rosselló Nevares

Honorable Thomas Rivera Schatz

Honorable Carlos J. Méndez Núñez

June 16, 2017

Page 2

A good example is the narrative that incorrectly asserts that the measures the Board 

approved in the way of amendments to the administration’s proposed fiscal plan to ensure 

sufficient liquidity to pay for essential services during FY18—i.e., a furlough program and 

the Christmas bonus reduction or elimination—will not go into effect if only the 

administration’s liquidity plan can reasonably be expected to generate additional cash 

reserves of $200 million by June 30, 2017. In fact—as stated in the Board Resolution of 

March 13, 2017, certifying the fiscal plan—the $200 million cash reserve requirement is in 

addition to the main requirement that the administration submit for Board approval, along 

with the proposed budget for FY18, implementation plans for the right-sizing or spending

reduction measures that provide necessary certainty that the critical liquidity and budgetary 

savings required by the fiscal plan will be achieved by the administration. 

The importance of the implementation plans for the right-sizing or spending reduction 

measures the administration commits to undertake cannot be overestimated. We stressed it 

again in our Unanimous Written Consent approving the submission of the Commonwealth

FY18 budget to the Legislature when we noted that “the Board expects that the final budget 

will...reflect any necessary changes to align to achievable implementation plans for 

spending reductions, to ensure the budget is fully aligned to the Commonwealth’s fiscal 

plan....”

Let me assure you those implementation plans will be evaluated fairly and responsibly. We 

need to make sure all the measures the administration has committed to undertake to 

generate the liquidity and budgetary savings necessary to fund essential services throughout 

FY18 can reasonably be expected to do just that.

Casual reference to a particular level of funding in the Treasury Single Account not only 

can be deceiving, but is bound to generate the confusion that we witnessed yesterday in the 

wake of certain press reports on the subject. Scant progress will be made towards the goal 

of ensuring the necessary liquidity to fund essential services in FY18 if we just focus on a 

certain balance in the Secretary’s TSA in a particular moment in time—let alone tout it—

and, more importantly, if implementation plans to produce the necessary budgetary savings 

during the fiscal year are inadequate or poorly executed. If that happens, Puerto Rico is all 

but certain to run out of money to fund the central government’s payroll come November

or December of this year.

Modest improvements in liquidity don’t change the reality of the Island’s fiscal situation. 

Under current law, beginning in July, Puerto Rico will face a worsening cash flow problem 

because of loss of federal funds and the depletion of pension funds’ assets. 

In short, the issue of liquidity needs to be understood in the context of the cash flow over

time. That is precisely the importance of the liquidity plan. While the administration did 

submit a liquidity plan in line with the proposed budget, we have yet to achieve confidence 

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Exhibit Letter from FOMB to Governor (6/16/17) Page 3 of 5
Honorable Ricardo A. Rosselló Nevares

Honorable Thomas Rivera Schatz

Honorable Carlos J. Méndez Núñez

June 16, 2017

Page 3

in the ability of Puerto Rico to fund essential services in an uninterrupted manner 

throughout the fiscal year taking into account several risk scenarios.

On that note, we must reiterate our earlier requests urging the administration to make and 

communicate as soon as possible the necessary public policy determinations with respect to 

what it understands constitute “essential services” in the context of PROMESA. As you 

know, in light of Puerto Rico’s fiscal situation, a PROMESA-compliant budget needs to 

reflect appropriate allocations for the adequate funding of essential services, pension 

benefits, investments to spur growth and other PROMESA priorities. We can no longer 

afford business as usual.

As we have stated in the past, the Oversight Board supports a fair, orderly and equitable 

restructuring of Puerto Rico’s debt, but such restructuring will take time and will not solve 

by itself Puerto Rico’s considerable fiscal disarray. We need to work within the parameters 

of PROMESA that provide for restructuring to a sustainable debt level so we can fund 

essential services, pension benefits, and the capital investments necessary to spur economic 

growth.

Finally, let me urge you further to work with the Oversight Board in the establishment of 

an appropriate, consistent and reliable protocol for the submission and publication of the 

various financial reports—including, but not limited to liquidity, collections, actual vs. 

budget—the administration must regularly submit to the Oversight Board. Transparency is 

a guiding principle specifically mandated by PROMESA. It is also, I know, a guiding 

principle of the Governor’s administration. Let’s make sure that, together, we deliver to all 

interested parties, stakeholders and, most importantly, the people of Puerto Rico the 

accurate and timely financial information they deserve and have every right to expect.

Governor, Mr. President and Mr. Speaker, in the past five and a half months the Oversight 

Board has given the Government of Puerto Rico—sometimes upon its request, sometimes 

out of our own volition—latitude to facilitate compliance with the mandates of PROMESA. 

For example, of our own accord, we changed our own guidelines regarding the formulation 

of a fiscal plan to grant the administration one more year in which to effect the spending 

reduction and revenue enhancement measures leading to fiscal equilibrium. At the 

administration’s request, we extended the automatic stay against litigation provided by 

PROMESA. We certified the administration’s proposed fiscal plan, noting our reservations 

in the way of amendments thereto. In every instance, we have provided the accommodation 

that you have required for two basic reasons: first, because we believed it was the 

reasonable and prudent thing to do given your short time in office as a new administration 

and a new legislature and, second, because we were, and remain, convinced of your 

steadfast resolve to comply with the requirements of PROMESA for the benefit of the 

people of Puerto Rico.

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Exhibit Letter from FOMB to Governor (6/16/17) Page 4 of 5
Honorable Ricardo A. Rosselló Nevares

Honorable Thomas Rivera Schatz

Honorable Carlos J. Méndez Núñez

June 16, 2017

Page 4

Now we are at a critical juncture that requires that we collectively strengthen that resolve. I 

trust that, working together, we will successfully remove any potential roadblocks in our 

path towards successful implementation of PROMESA and the attainment of its goals of 

establishing fiscal responsibility, regaining access to markets, restructuring the public debt, 

strengthening economic competitiveness, and restoring opportunity to everyone in Puerto 

Rico.

The Oversight Board looks forward to continue working with your administration and the 

Legislature to accomplish the considerable remaining requirements and goals of 

PROMESA for the benefit of the people of Puerto Rico, its creditors and other 

stakeholders.

Sincerely,

José B. Carrión

Chair

Andrew G. Biggs 

Carlos M. García

Arthur J. González

José R. González

Ana J. Matosantos

David A. Skeel, Jr.

CC: Natalie A. Jaresko

 Elías F. Sánchez-Sifonte

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