You're reading: Jaresko, ex-finance minister, to head Puerto Rico debt rescue

Former Finance Minister Natalie Jaresko will manage a team set to lead the U.S. Caribbean territory of Puerto Rico out of a massive debt crisis, a board appointed to manage the debt announced on March 23.

Jaresko was Ukraine’s finance minister from December 2014 to April 2016, restructuring the country’s debt and negotiating a $17.5 billion lending program with the International Monetary Fund that runs through 2018.

“Ukraine’s situation three years ago – like Puerto Rico’s today – was near catastrophic, but she worked with stakeholders to bring needed reforms that restored confidence, economic vitality and reinvestment in the country and its citizens,” said debt board chairman Jose Carrion in a press release. “That’s exactly what Puerto Rico needs today.”

Puerto Rico has been going through a lengthy economic slump since the 2008 economic crisis. Since 2015, it has defaulted on much of its debt, leading the U.S. Congress to enact a law in 2016 to solve the debt crisis.

That law – called Promesa – set up a board to manage the country’s return to fiscal health. As per the appointment, Jaresko will lead the group in its efforts to stabilize Puerto Rico’s economy.

“Puerto Rico is suffering from years of fiscal deficits and the related debt burden,” she wrote in a statement, adding that “structural reforms” would “build the economy’s resilience, attract new investments, create jobs, and produce growth and increased living standards over time for the people of Puerto Rico.”

The former minister will commute to Puerto Rico from Ukraine one time a month until June, Carrion said. The government, which needs to restructure $70 billion in public debt, will pay for Jaresko’s travel and board, as well as a $625,000 annual salary.

Jaresko, a Chicago-born banker from a family of Ukrainian immigrants, was chosen by a debt restructuring board to lead the process. Before becoming finance minister of Ukraine, she managed Horizon Capital, a private equity fund with U.S. government funding. She also ran the U.S. Embassy’s economic section in the 1990s.

The former Ukrainian official will be tasked with dredging Puerto Rico’s credit rating away from junk status, along with balancing the island territory’s budget within four years.

As finance minister, Jaresko presided over the collapse and resurrection of Ukraine’s economy. As she noted in a statement about her hiring, Ukraine’s gross domestic product declined 9.8 percent in 2015, but set itself on a path to rebound in 2016 with 1.8 percent growth. However, Ukraine’s GDP is less than $100 billion.

“Combining fiscal austerity, debt restructuring, and structural reforms, we were able to return the economy from the brink of financial disaster to stability and growth,” Jaresko wrote.