Puerto Rico Likely to Default Next Year, Says Island Governor
The economic crisis is worsening in Puerto Rico, so much so that the island’s governor, Alejandro Garcia Padilla, predicts that it will default by 2016. And it is all because of an overwhelming amount of debt.Advertisement
Come January, Puerto Rico reportedly faces bond payments amounting to more than $900 million. Moreover, this includes a $357 million general obligation bond payment that is due as early as January. And although Puerto Rico’s Public Finance Corporation missed a bond payment amounting to $58 million back in August, the island’s possible failure to make payment on January 1 will mark its first major default payment.
According to a report by Associated Press, Governor Garcia had travelled to Washington to meet with some Republican legislators and others right before a vote by Congress, which will decide if a provision can be given to Puerto Rico public agencies to access Chapter 9 bankruptcy provisions. And although Garcia did not give a direct answer as to whether Puerto Rico can meet the January 1 deadline, he said, “If I have to choose on Jan. 1 between paying the salary of Puerto Rico workers or paying bondholders, I will pay the Puerto Ricans.”
In an emailed statement to Morning News USA, the Puerto Rico Treasury has said that its revenues for November only amounted to $488.6 million, falling short of estimates by $15.4 million. Puerto Rico Treasury Secretary Juan Zaragoza Gómez says that this is the third consecutive month that the island’s revenues had missed budget estimates.
Last Wednesday, a bill was introduced in order to create an authority to oversee Puerto Rico’s finances, which can offer as much as $3 billion in repurposed funds.