September 29, 2017 / 7:55 PM / a year ago

Puerto Rico oversight board to evaluate reassessment of fiscal plan -source

NEW YORK (Reuters) - The oversight board in charge of resolving Puerto Rico’s debt crisis will evaluate a reassessment of the fiscal plan for the island after Hurricane Maria tore through the U.S. territory last week, according to a source familiar with the matter.

The source added that board members were meeting in Washington on Friday with federal agencies and members of Congress. Any public position or movement by the board on the matter could be communicated as early as next week, the source said.

Puerto Rico filed for the biggest ever U.S. local government bankruptcy in May. A board, called the Financial Oversight and Management Board, was named in August to resolve the Caribbean island’s debt and economic crisis. The board consists of seven board members: four Republicans and three Democrats.

The source declined to be identified because the details have not yet been made public.

The hurricane has raised questions about how much of a role the federal government plays in solving Puerto Rico’s crisis and whether creditors would give any relief to the island, weighed down by $72 billion in debt.

Bondholders and investors have said that debt forgiveness would be unlikely as it could be politically difficult and lead to lawsuits. The more likely scenario would be that FEMA and the federal government extend to Puerto Rico aid that can be used to rebuild the island, while creditors continue to negotiate the underlying debt problems in bankruptcy.

A senior White House official on Friday said that the Trump administration intends to let the oversight board do its work to deal with the debt crisis.

“I think the desire is to continue to let that process work out,” the official said, speaking on condition of anonymity.

But the devastated power system owned by the Puerto Rico Electric Power Authority could require more direct federal involvement, the official said. PREPA declared bankruptcy in July.

“Depending on the level of destruction on the power generation component of it, you could see more direct federal involvement, outside of the oversight board,” the official said.

Bloomberg earlier reported that Puerto Rico’s overseers would reassess the plan.

Additional reporting by Megan Davies

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