On Friday, August 1st, President Trump fired five of the seven members of the Fiscal Oversight and Management Board (FOMB) of Puerto Rico. The board has overseen Puerto Rico’s finances since 2016, following the territory’s bankruptcy filing. (1)(2)

The news, initially reported by conservative media outlet Breitbart News and subsequently confirmed by Bloomberg, was welcomed by many political and social leaders in Puerto Rico. However, the decision also drew criticism from others. (1)(2)(8)

“The Financial Oversight and Management Board of Puerto Rico has been run inefficiently and ineffectively by its governing members for far too long, and it’s time to restore common sense leadership,” a White House official told Breitbart News. (1)(2)

Budgetary Criticism of the Fiscal Board

The performance of the Fiscal Oversight Board has faced widespread criticism, primarily because it exceeded its original estimated budget by more than five times since its inception nine years ago. Critics emphasized the contradiction of a board promoting fiscal austerity while spending nearly $2 billion over this period, largely in administrative and consulting fees. (3)(1)

“How is it possible that a board that promised to cost less than $400 million ended up spending more than $2 billion? How can it preach austerity while spending lavishly on consultants who are not accountable and who, in many cases, have no incentive to terminate their contracts?” asked Pablo José Hernández Rivera, Resident Commissioner for Puerto Rico in Congress. (3)

White House officials cited a report from December 2017 indicating that the oversight board’s annual salary budget alone was $3 million for 14 employees. According to budget figures obtained by The Daily Caller, this equates to an average salary of $214,000 per employee, starkly contrasting with Puerto Rico’s median household income of $20,078. (2)

The PREPA Debt Impasse

The reshuffling of the fiscal board has also been influenced by an ongoing debt impasse. Internal creditors hold 39% of Puerto Rico’s debt, with the Puerto Rico Electric Power Authority (PREPA) accounting for 17%. Negotiations for settling the debt between PREPA and the fiscal board have continued unsuccessfully for years. Despite a U.S. Court of Appeals for the First Circuit ruling affirming the bonded debt as a perfected lien on the utility’s net revenues, the fiscal board refused to accept this decision. Instead, it proposed settling the $8.5 billion debt at $2.6 billion—a proposal rejected by PREPA, which insists on receiving the full amount. (4)(5)

The fiscal board argued that paying the full debt to bondholders by increasing electricity rates would create severe financial hardship for Puerto Ricans, raising rates by around 40 cents per kilowatt-hour from the current 26 cents, already the second-highest in any U.S. jurisdiction. (6)

PREPA and the board have been embroiled in costly litigation for years without reaching a viable settlement. Reports from the fiscal board to Congress regarding PREPA’s restructuring process have yielded no positive political outcomes. “Both sides—Republicans and Democrats—are wary that the current Puerto Rico government can bring the Electric Power Authority bankruptcy process to a viable conclusion,” noted Alvin Velázquez, a professor of bankruptcy at Indiana University School of Law. (6)

Controversial Energy Deal Rejection

A recent breakdown in negotiations between a major energy company, New Fortress Energy (NFE), and the fiscal board may have intensified opposition against the board. NFE had negotiated a $20 billion natural gas supply deal with Puerto Rico, but the fiscal board refused approval due to concerns about cost and long-term energy dependency—concerns echoed by Fiscal Board critics like Resident Commissioner Hernández Rivera. (2)(7)

The possible influence of PREPA and NFE on President Trump’s decision to remove the majority of the board’s members has generated some backlash. Many left-wing Puerto Rican politicians argue that the board’s reshaping was driven by investor interests rather than genuine concern for its performance. (8)

Looking Ahead: Ending the Fiscal Board

Initially, the fiscal board did not acknowledge President Trump’s decision but later confirmed it. Governor Jenniffer González stated, “During my term in Congress as resident commissioner, I worked with various members of the JSF, and now I will work alongside whoever makes up the new Board, once President Trump announces it.” (8)

The ultimate goal, agreed upon by both sides of the political spectrum, is the eventual dissolution of the fiscal board once it achieves its objectives. Governor González emphasized that “This work will continue with the new members to put an end to the presence of the Fiscal Oversight Board in Puerto Rico,” while Resident Commissioner Hernández Rivera described the existence of the fiscal board as “a tragedy: for Puerto Rico, for the United States, and for the values this nation claims to defend.” (2)(8)

Despite these intentions, the fiscal board’s objectives—approving at least four consecutive balanced budgets for Puerto Rico, restructuring Puerto Rican debt, and stabilizing the island’s finances—have yet to be fulfilled. According to law, the fiscal board will continue functioning until at least 2030. (6)(9)

References

1. El Nuevo Día (August 5, 2025) — “Donald Trump destituye a cinco de los siete miembros de la Junta Fiscal, según dos medios estadounidenses”, taken from https://www.elnuevodia.com/corresponsalias/washington-dc/notas/donald-trump-destituye-a-cinco-de-los-siete-miembros-de-la-junta-fiscal-segun-dos-medios-estadounidenses/
2. The San Juan Daily Star (August 5, 2025) — “Fiscal board confirms dismissal of 5 of its 7 members”, taken from https://www.sanjuandailystar.com/all-news/categories/local
3. Comisionado Residente exige cuentas a la Junta Fiscal por su costo, su duración y su falta de resultados (July 17, 2025) — taken from https://hernandez.house.gov/media/press-releases/comisionado-residente-exige-cuentas-la-junta-fiscal-por-su-costo-su-duracion-y
4. The San Juan Daily Star (December 10, 2024) — “PREPA bondholders rip fiscal board’s court battles, propose settlement”, taken from https://www.sanjuandailystar.com/post/prepa-bondholders-rip-fiscal-board-s-court-battles-propose-settlement
5. The San Juan Daily Star (October 10, 2024) — “Fiscal board rejects PREPA bondholders’ offer”, taken from https://www.sanjuandailystar.com/post/fiscal-board-rejects-prepa-bondholders-offer
6. El Nuevo Día (July 18, 2025) — “Experts say mistrust in Puerto Rican government’s handling of fiscal and bankruptcy issues still prevail”, taken from https://www.elnuevodia.com/english/news/story/experts-say-mistrust-in-puerto-rican-governments-handling-of-fiscal-and-bankruptcy-issues-still-prevail/
7. Ainvest (July 25, 2025) — “Puerto Rico Rejects $20 Billion LNG Deal, Raising Questions About Island’s Energy Transition”, taken from https://www.ainvest.com/news/puerto-rico-rejects-20-billion-lng-deal-raising-questions-island-energy-transition-2507/
8. El Nuevo Día (August 5, 2025) — “Donald Trump no consultó con Jenniffer González decisión de despedir a cinco miembros de la Junta de Supervisión Fiscal”, taken from https://www.elnuevodia.com/corresponsalias/washington-dc/notas/donald-trump-no-consulto-con-jenniffer-gonzalez-decision-de-despedir-a-cinco-miembros-de-la-junta-de-supervision-fiscal/
9. The San Juan Daily Star (July 11, 2025) — “Puerto Rico to focus on fiscal board’s exit at congressional hearing”, taken from https://www.sanjuandailystar.com/all-news/categories/viewpoint

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