Bryan issued statement after Moody’s said GERS insolvency could lead to USVI debt default

Gov. Albert Bryan Jr. issued a statement on April 20, 2021, after Moody’s Investors Service said the Virgin Islands’ financial outlook remained tied to the solvency of the Government Employees’ Retirement System following a Third U.S. Circuit Court of Appeals ruling on past-due government contributions.

The appeals court ruled earlier in April 2021 that the Government of the Virgin Islands was not liable for about $43 million in interest and fees tied to overdue contributions to GERS.

In an April 19, 2021, opinion, Moody’s said the ruling was credit positive for the territory because it provided more than $40 million in relief from court-ordered pension contributions and helped the government’s near-term ability to continue providing services. Moody’s also said the ruling did little to change the retirement system’s expected insolvency within the next several years.

Moody’s said GERS was likely to run out of assets in fiscal 2024 even if the government paid the amount upheld by the appeals court in full, unless there was an additional cash infusion or benefit cuts. The firm said a GERS insolvency would likely force debt default and restructuring for the Virgin Islands.

Bryan said the ruling was not a loss for GERS or the territory and said it underscored the need for the executive and legislative branches to work together on a comprehensive solution. He also said the government should take another look at refinancing bond debt to lower rates and free up more money for the retirement system.

Official source: https://www.vi.gov/governor-bryans-statement-on-moodys-assessment-of-gers/