• GDB President Melba Acosta will leave the bank July 31
  • Acosta to depart as federal financial oversight begins

Puerto Rico Government Development Bank President Melba Acosta will leave the bank at the end of July as President Barack Obama forms a control board to oversee the island’s finances.

The Government Development Bank has been running out of cash and defaulted in May on $370 million due to bondholders. It has been operating under an emergency period, which allows withdrawals only for public health and safety programs. The bank served for years as overseer of the island’s finances until Governor Alejandro Garcia Padilla in April appointed Victor Suarez, Puerto Rico’s Secretary of State, to serve as the commonwealth’s fiscal agent.

Acosta has served as the GDB’s president since October 2014. Garcia Padilla accepted Acosta’s resignation Thursday, the governor said in a statement. Her last day at the bank will be July 31.

Obama has until Sept. 15 to create a seven-member control board that will monitor Puerto Rico’s budgets and oversee any restructuring to reduce the island’s $70 billion debt load. The panel is a key part of a law, known as Promesa, that Obama enacted last week to help the commonwealth put an end to its chronic budget deficits and arrest an escalating fiscal crisis. Puerto Rico defaulted Friday on nearly half of $2 billion of principal and interest due to investors, the bulk of which was to repay general-obligation bonds.

“I wish to express my gratitude to the governor for entrusting me with the responsibility of putting Puerto Rico’s public finances in order,” Acosta said in a statement. “I remain hopeful that we will be able to bring Puerto Rico’s debt service to sustainable levels -- more so now that we have the tools provided by Promesa -- and gradually recover financial stability and the much needed economic growth.”

Puerto Rico’s economy has shrunk every year but one in the past decade and residents move out at record rates to find work on the U.S. mainland, leaving the government unable to cover its bills.

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