Puerto Rico to deliver reform plan on Wednesday

After becoming first commonwealth to default, Puerto Rico plans to announce its reform plan to public

Photo by: AP
Photo by: AP

The Normandie hotel sits abandoned in San Juan, Puerto Rico, July 29, 2015

A plan to turn around indebted US territory Puerto Rico will be delivered to its governor on Tuesday and made public on Wednesday, according to a statement from the governor's chief of staff Victor Suarez.

A working group appointed by Puerto Rico Governor Alejandro Garcia Padilla had been slated to deliver the plan on August 30, but it was delayed until September 8 due to Tropical Storm Erika, Suarez previously said.

"This plan is an indispensable element to direct the economic development of Puerto Rico, face the fiscal challenges and recover the social well-being of Puerto Ricans," Suarez said in a statement on Tuesday.

Puerto Rico paper El Nuevo Dia in August reported the plan as proposing Puerto Rico inject $1.5 billion in capital expenditures into the island over five years, citing a draft of the plan.

That capital injection would come from a combination of debt restructuring, by cutting $1 billion in operating expenses, and revenue increases, raising $1 billion. Reductions would include cuts to schools, its university and healthcare, while revenues would include a recent sales tax increase to 11.5 percent, implementing a 4 percent services tax as of October 1 and transitioning to a value-added tax in April 2016, the paper said at the time.

Garcia Padilla shocked investors in June when he said the island's debt, totaling $72 billion, was unpayable and required restructuring. The island has been in recession for nearly a decade.