As Deadlines Come and Go, Puerto Rico's Debt Crisis Grows

By Hinckley, Story | The Christian Science Monitor, May 1, 2016 | Go to article overview

As Deadlines Come and Go, Puerto Rico's Debt Crisis Grows


Hinckley, Story, The Christian Science Monitor


Puerto Rico's May 1 deadline on a $422-million debt payment has arrived, and US lawmakers are no closer to finding a solution for the island's financial woes.

Most of Sunday's payment is principal and interest due from the Government Development Bank, Puerto Rico's main bond issuer and fiscal agent.

"That deadline is imminent, but Republicans in the House and Democrats in the administration are still haggling over the terms of a bill to rescue Puerto Rico," writes The New York Times. "Missing the payment risks further destabilizing its shrunken economy. And there are concerns that the passage of any legislation could be delayed until the island nears the tipping point of its debt woes: a $2-billion debt payment due on July 1."

Before Congress left Washington Friday for a weeklong recess, legislators were deadlocked over any plan that could be seen as similar to bailout bills of the 2008 financial crisis. Rep. Rob Bishop (R-Utah) is leading a draft of a tentative rescue plan in the House, but it has faced opposition from legislators in both parties who see the bill as nothing more than a bailout.

"For me, I think to any human being, 'bailout' means you're going to get money to solve your problem," said Representative Bishop. But the bill would "give Puerto Rico access to a court-enforced debt restructuring in exchange for the imposition of a federal fiscal oversight board," so the island would get no direct money out of the deal. "So to say it's a bailout, it's obviously not just a stretch of the meaning of the word, there has to [be] an ulterior motive."

Puerto Rico's Governor Alejandro Garcia Padilla is frustrated with Washington's inaction because he has warned about a default on Sunday's deadline for months. And while Washington may be at a standstill, the financial crisis has everyday implications for the 3.47 million people who call Puerto Rico home.

The island's unemployment rate was 11.8 percent in March, more than twice the overall US rate of five percent. Tens of thousands of government workers have been laid off since 2009 to cut costs and 10 percent of the island's schools have been closed since 2014.

These personal hardships along with others have led to Puerto Rico's largest mass exodus in the last 50 years. The island county has witnessed a 9 percent population decline in the 21st century, with almost seven percent occurring between 2010 and 2015. …

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