SAN JUAN, Puerto Rico (AP) — New austerity measures are coming for Puerto Rico as a federal control board overseeing the US territory’s finances met yesterday to approve several fiscal plans that will serve as the island’s economic blueprint for the next five years.

Drafts of the plans released Wednesday call for a 10 per cent average cut to a pension system facing nearly US$50 billion in liabilities. They also seek the closure of prisons, consolidation of dozens of state agencies and significant reductions in government subsidies to the island’s 78 municipalities and Puerto Rico’s largest public university. The board also said Puerto Rico’s government should cut sick leave and vacation pay by half.

“These plans offer a once-in-a-generation opportunity to do things right and turn these trends around,” board chairman Jose Carrion said, alluding to years of economic decline, excessive borrowing and fiscal mismanagement followed by the devastation caused by hurricanes Irma and Maria last year.

The fiscal plan for the island’s central government estimates Puerto Rico will receive more than US$50 billion in federal funds to help rebuild from Hurricane Maria, which killed dozens of people and caused an estimated US$100 billion in damage when it hit September 20. The plan also anticipates a more than US$6 billion surplus over five years as the island struggles to restructure a portion of its more than US$70 billion public debt load amid an 11-year recession. Puerto Rico’s financial debt coupled with the pension liabilities are nearly twice the size of its economy.

The board said the government needs to consolidate its 114 agencies into 22 groups as well as consolidate police stations and replace officers performing civilian duties with “less expensive” civilian personnel.

The board is scheduled to approve all seven fiscal plans by Friday, including those for Puerto Rico’s power and water and sewer companies. Hours before the first meeting began yesterday, Puerto Rico’s government announced it would try to trim its workforce by offering some workers, including in police and education departments, inducements to leave.

Gerardo Portela, executive director of the island’s financial authority, said such workers can keep receiving their salary for a certain period as they transition to the private or non-profit sector.

Christian Sobrino, the governor’s representative to the board, said the government remains firm in its rejection of pension cuts and other measures “that we consider unnecessary and would hamper economic development”.

Some worry the board’s financial estimates are too optimistic.

Economist Jose Caraballo told The Associated Press that help pledged by federal officials might not materialise, leaving the US territory with less money than anticipated.

“We know about President Trump’s emotional swings,” he said. “And he might say no next time.”

Caraballo also said layoffs are inevitable even though none of the fiscal plans released Wednesday specifically mention them. “To eventually reach those numbers in that plan, I believe dismissals are implicit,” he said.

On broader economic matters, the board said Puerto Rico’s government should make a Christmas bonus voluntary for employers and allow employers to dismiss workers without first having to prove just cause. It called for the minimum wage for workers 25 and older to increase by 25 US cents an hour and said the government should immediately impose a work requirement for a nutritional assistance programme and increase a labour force participation rate that stands at 42 per cent, the seventh lowest in the world.