(Reuters) - The federal board overseeing Puerto Rico's financial restructuring on Friday set a target date of Jan. 31, 2017 to certify a fiscal turnaround plan for the U.S. territory, and heard from bondholders and industry leaders about the merits of a draft of the proposal.

The board, created this year under the Puerto Rico rescue law known as PROMESA, is working on debt restructuring talks with holders of Puerto Rico's $70 billion in bonds in an effort to pull the struggling island out of a crisis marked by a 45 percent poverty rate and shrinking population.

The bipartisan, seven-member board must approve the island’s annual budgets and certify a fiscal turnaround plan submitted by its governor, Alejandro Garcia Padilla.

The governor presented a draft plan last month, forecasting a financing gap as high as $59 billion over 10 years. While the plan proposes some revenue-generating measures to close the gap, it relies heavily on cutting repayments to bondholders.

Board Chairman Jose Carrion said at Friday’s meeting in Fajardo, Puerto Rico, that the board would aim to certify a turnaround plan by Jan. 31. The target date could be ambitious as Garcia Padilla’s term ends on Jan. 1, and his successor, Ricky Rossello of the opposition party who was elected on Nov. 8, may want to submit his own plan.

Rossello opposes debt defaults, particularly on the island’s constitutionally backed general obligation debt, whereas Garcia Padilla has supported periodic defaults in favor of ensuring government services.

Among those testifying at Friday’s meeting was Jorge Irizarry, who leads a group of local bondholders. Irizarry said Garcia Padilla’s draft plan failed to account for local residents who hold Puerto Rican bonds.

The vast majority "depend on these bonds … and are just as vulnerable” as any other segment of the population, Irizarry said.

Carrion also said on Friday the board has selected two law firms as legal counsel, and another to serve as a strategic consultant. He said the board hopes to announce the firms next week, when it aims to complete contract negotiations.

Conway MacKenzie, an adviser to the Puerto Rican government, briefed the board on the island’s liquidity, reiterating earlier forecasts of a liquidity gap as high as $3 billion by the end of the fiscal year.

(Reporting by Nick Brown in New York; Editing by Jeffrey Benkoe)