Puerto Rico readies fiscal plan, awaits oversight board: governor

August 9, 2016 4:22 PM EDT

Puerto Rico's Governor Alejandro Garcia Padilla addresses the audience at the capitol building in San Juan, February 29, 2016. REUTERS/Alvin Baez

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By Daniel Bases

NEW YORK (Reuters) - Puerto Rico's governor said on Tuesday he expected to present an updated fiscal plan for the debt-laden U.S. territory shortly after the White House appoints members of a federal oversight board with authority to renegotiate its $70 billion of debt.

"I expect this new fiscal plan will be ready once the board is announced," Governor Alejandro Garcia Padilla told reporters in New York via a Skype video conference call from his office in San Juan. The call was part of an event organized by the City University of New York Graduate School of Journalism.

On June 30th, U.S. President Barack Obama signed the Puerto Rico Oversight, Management and Economic Stability Act just one day before the island faced a deadline to make a debt payment of around $2 billion. Garcia Padilla authorized a suspension of the payments just after Obama signed the bill into law.

Under the act, the deadline for naming the seven-member board is Sept. 15. Garcia Padilla said on Tuesday he did not have any idea who would be named nor the timing, but hoped it would happen before the end of August. Obama will choose from candidates presented by Republican and Democratic leaders in the House of Representatives and Senate.

Garcia Padilla, who is not running for reelection and has said the board would be an imposition on the island's sovereignty, accepted that the legislation was needed in order to work out a solution.

The oversight board has the authority to enforce balanced budgets and government reform if the Puerto Rican government fails to do so, including the sale of government assets, the consolidation of agencies and staff cuts.

The board also has the authority to facilitate consensual restructuring talks, or push Puerto Rico into a court-supervised process akin to U.S. bankruptcy.

After years of talks between the government and its creditors, failure to reach an agreement on restructuring the debt led to the passage of the legislation that all parties said was imperfect but necessary.

Garcia Padilla said he was still open to talking with creditors and that "prosperity will not return overnight."

(Reporting by Daniel Bases; Editing by Richard Chang)

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