SAN JUAN Dec 11 A new team was appointed on Tuesday to head Puerto Rico's government financial adviser, the Government Development Bank, in a move that may help the debt-laden commonwealth address its economic problems.
Former Banco Popular President David Chafey was named Board chairman and attorney Javier Ferrer Fernandez was named president of the GDB by Governor-elect Alejandro Garcia Padilla.
Ratings agencies and investors have been calling for Puerto Rico to take action on its government pension systems, which have a total unfunded liability of $37.3 billion, and to return to a complete structurally balanced budget by fiscal year 2014, which starts July 1, 2013.
"We are giving priority to economic development. We don't have time to wait," Garcia Padilla said. "They will be authors of improving the economy, increasing collections and stimulating economic activity, investment and the creation of wealth."
The GDB undertakes bond and other transactions on behalf of Puerto Rico's government agencies, public corporations and town governments and provides financial oversight for them.
America's $3.7 trillion municipal bond market has been awaiting these nominations since Garcia Padilla was elected last month over Governor Luis Fortuno.
Puerto Rico debt has sat out a rally in U.S. munis, and spreads between the island's 10-year debt and AAA-rated issues have widened since late July by nearly a third, or 62 basis points, to 270, according to Municipal Market Data.
Chafey has been chief operating officer and president at Popular Inc, the holding company of Banco Popular de Puerto Rico . He began his career at the bank in 1980 as vice president of the investment division. Ferrer, an attorney with the firm Pietrantoni Méndez & Alvarez, has served as an advisor to financial institutions.
Also on Tuesday, the governor-elect named Melba Acosta as his Treasury secretary and Carlos Rivas Quiñones as head of the Office of Managment & Budget.
Acosta, a lawyer at McConnel Valdes Law Firm, served as Office of Management & Budget director during the administration of Governor Sila Calderon from 2001 to 2004.
Rivas Quiñones served as head of the Puerto Rico Housing Finance Authority during the administration of Governor Aníbal Acevedo Vilá from 2005 to 2008.
Garcia Padilla is due to take office on Jan. 2.