Puerto Rico's governor says default is likely

Puerto Rico faces more than $900 million in bond payments in January, including a $357 million general obligation bond payment due Jan. 1. It would be the island's first major default if the payment is not made.

|
Pablo Martinez Monsivais/AP/File
Puerto Rico Gov. Alejandro Javier Garcia Padilla testifies on Capitol Hill in Washington, Tuesday, Dec. 1, 2015, before the Senate Judiciary Committee hearing on Puerto Rico's fiscal problems. Garcia said Wednesday that it's probable the U.S. territory will be unable to make more upcoming debt payments because it has no more money amid a worsening economic crisis.

Puerto Rico's governor said Wednesday that it's probable the U.S. territory will be unable to make more upcoming debt payments because it has no more money amid a worsening economic crisis.

Gov. Alejandro Garcia Padilla spoke during a trip to Washington to meet with Republican legislators and others before a vote by Congress that might include a provision giving Puerto Rico public agencies access to Chapter 9 bankruptcy provisions.

Puerto Rico faces more than $900 million in bond payments in January, including a $357 million general obligation bond payment due Jan. 1. It would be the island's first major default if the payment is not made. Puerto Rico's Public Finance Corporation already missed a $58 million bond payment in August.

"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," Garcia said. "It's that simple. They will have to go to court to force me to do the opposite."

Garcia did not directly answer a question about whether the government could make the Jan. 1 payment if Congress approved the bankruptcy measure. He said only that it would give Puerto Rico flexibility in talking with creditors out how to make upcoming payments.

Puerto Rico recently made a $354 million bond payment even though officials said they were running out of money and warned of a possible government shutdown. Some investors have accused Garcia's administration of exaggerating the financial crisis to evade payment.

Antonio Weiss, counselor to the U.S. Treasury secretary, urged Congress on Wednesday to approve a package that includes a debt-restructuring mechanism for Puerto Rico. He said basic services on the island have not been cut yet in part because the government has deferred payment of $300 million in tax refunds and borrowed $400 million in emergency loans.

"Resolving Puerto Rico's crisis requires congressional action," he said.

On Wednesday, the Republican chairmen of the Senate Judiciary, Finance and Energy committees introduced a bill that calls in part for the creation of an authority that would oversee Puerto Rico's finances and could offer up to $3 billion in repurposed funds.

Sen. Orrin Hatch, R-Utah, said they drew up the legislation using the limited information they had.

"Despite repeated attempts by Congress to clarify how the interplay between federal tax, health care and pension policies affect the territory's economy, we have been unable to receive audited financial statements from Puerto Rico or adequate information from federal health officials," he said.

The U.S. Supreme Court announced last week that it would hear an appeal on a ruling that barred Puerto Rico from giving municipalities the power to declare bankruptcy.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Puerto Rico's governor says default is likely
Read this article in
https://www.csmonitor.com/USA/2015/1209/Puerto-Rico-s-governor-says-default-is-likely
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe