SAN JUAN, PR — Following the unceremonious firing of five out of the seven members of Puerto Rico’s unelected fiscal control board by President Trump, all eyes turn towards how it will impact the archipelago’s fragile electrical grid and delicate economy.

Colloquially called “La Junta,” the Financial Oversight and Management Board (FOMB) has slashed Puerto Rico’s debt in the near-decade. It was formed in 2016 under legislation signed into into law by President Obama. At that time, Puerto Rico declared itself unable to pay its $70 billion in public debt.

However, the FOMB has been at an impasse when it comes to the debt for restructuring of the Puerto Rico Electric Power Authority (PREPA). The most recent adjustment plan called for cutting down the $8.5 billion debt down to $2.6 billion. But, Golden Tree Asset Management, who represents bondholders who purchased the debt following the bankruptcy declaration, are clamoring for a $12 billion payment, including bonds and their interest.

“The immediate challenge is in the case of PREPA’s debt restructuring, which is the only one pending that could cause significant damage to the economy,” said José Caraballo Cueto, economist and director of the Center for Development Studies at the University of Puerto Rico-Río Piedras.

The fired members are board chairman Arthur González, Cameron Mackenzie, Betty Rosa, Juan Sabater and Luis Ubiñas. All five are Democrats, and most were recommended or appointed by a Democrat, except for Mackenzie, who was nominated by Republican Speaker Mike Johnson. The remaining members, Andrew Biggs and John Nixon, are Republicans.

While Trump can recommend new members to the FOMB, only Congress can approve appointments. Several experts told The Latino Newsletter that it is highly likely that new FOMB members will favor the bondholders’ position of a large payment.

“New [appointees], if they have orders to end everything as quickly as possible, will increase the amount that PREPA pays back to the bondholders. Obviously, part of that is increasing the electricity rate. That will harm small businesses and, I believe, much of the poor population of Puerto Rico,” said Alvin Velázquez, bankruptcy law professor at Indiana University Mauer School of Law.

Puerto Ricans have the most costly electricity in the United States while earning less than half the income of the poorest state, according to U.S. Census Data. At the same time, it has one of the least reliable power grids in the country.

A previous FOMB plan that was rejected by bondholders had called for a “legacy charge” that would have had a "devastating effect on the economy,” said Caraballo Cueto, who previously conducted a study about how the then-possible price hike would affect businesses. He worries that new Trump-aligned board members would go down a similar path to pay bondholders what they claim they are owed.  

Daniel Santamaría Ots, co-executive director of research and public policy at the nonprofit organization Espacios Abiertos, says that it is highly unlikely Puerto Rico will be able to pay anything higher than what is currently suggested. Shortly after the devastation wrought by Hurricane María, the organization released a study it had commissioned that found the archipelago’s debt unsustainable and recommended it be cut between 70% and 90%. 

While it is by no means perfect, the currently proposed restructuring plan was decided after the FOMB realized that paying any higher amounts would be unsustainable, Santamaría Ots explained. The process will not be easy and it will be complicated, but he believes a new Trump-aligned board will not be able to meaningfully change much from the current adjustment plan.

“They are going to have to demonstrate that Puerto Rico has the capacity. Saying it louder is not going to be enough. They're going to have to clearly document what they're basing their claim on, what they're relying on to say that Puerto Rico can pay, because there's no evidence to support that position,” Santamaría Ots said about a possible plan that proposes a rate hike or paying the bondholders more.

According to an unnamed White House official, the FOMB had “been run inefficiently and ineffectively by its governing members for far too long and it’s time to restore common sense leadership.” The official accused the board of receiving “exorbitant salaries” and extending the bankruptcy. 

While the far-right activist Laura Loomer tweeted a series of screeds against the FOMB in the weeks leading up to the dismissals, she did not influence the White House’s decision, according to emails seen by Bloomberg. However, leading up to the dismissals, she had tweeted about the FOMB and its spending several times over the course of July.

While the FOMB did not respond to a request for comment from The Latino Newsletter, the board continues its day-to-day operations and work with the Puerto Rican government, per a press release published on Wednesday. 

Reactions from different political figures have run the gamut from celebration to open opposition.

Former FOMB member, Justin Peterson, who was appointed by Trump after previously working for bondholders, celebrated the firings on social media. He had previously criticized cutting down PREPA’s debt payment, and the White House justification for the new firings hinted at Peterson’s criticisms, according to local paper El Nuevo Día. 

Peterson had previously suggested substituting the FOMB for the Department of Treasury, and paying off the debt through a direct payment from local government and federal loans. 

David Skeel, former chair of the board, posted on X that fired members could seek legal recourse to combat their dismissals. Biggs, one of the remaining members of the FOMB, posted on his personal Facebook that he was “opposed” to his colleagues being fired.

Pro-statehood Governor Jenniffer González Colón, a Republican, said that she would continue to work with new appointees to ensure the end of the FOMB’s time on the archipelago. She had previously said that central government funds can be used to pay PREPA bondholders in full to prevent a possible rate hike. 

Francisco Domenech, her chief of staff and director of the Puerto Rico Fiscal Agency and Financial Advisory Authority, stated that “nothing has changed” and that there will be continuity with the FOMB after the firings. He previously worked for several investment firms that purchased Puerto Rican bonds, per the Centro para Periodismo Investigativo. 

Pablo José Hernández, Puerto Rico’s non-voting representative in Congress, posted on X that “the main problem with the Oversight Board isn't who makes it up, but rather its undemocratic nature.” His party supports the commonwealth status. Meanwhile, María de Lourdes Santiago, senator for the pro-independence party, wrote there is “nothing to celebrate” and that it came “to protect the financial predators who benefited for decades from the triple exemption and still want more, even at the risk of a second bankruptcy.”

The FOMB is routinely criticized for having almost complete control over Puerto Rico’s finances without being elected. 

“That totalitarianism, it seems like it’s easier to explain when it comes to a colony,” Caraballo Cueto said. 

The FOMB has also been criticized for spending more than $2 billion on lawyers, advisors, and consultants. Robert Mujica, the board’s executive director, makes a $625,000 salary, about 24 times the median household income in Puerto Rico.

Carlos Berríos Polanco is a journalist from Puerto Rico who covers climate, conflict, and their intersection.

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