As deadlines come and go, Puerto Rico's debt crisis grows
Puerto Rico鈥檚 May 1 deadline on a $422-million debt payment has arrived, and US lawmakers are no closer to finding a solution for the island鈥檚 financial woes.听
Most of Sunday鈥檚 payment is principal and interest due from the Government Development Bank, Puerto Rico鈥檚 main bond issuer and fiscal agent.
鈥淭hat deadline is imminent, but Republicans in the House and Democrats in the administration are still ,鈥� writes The New York Times. 鈥淢issing 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.鈥�
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.听
鈥淔or me, I think to any human being, 鈥榖ailout鈥� means you鈥檙e going to ,鈥� said Representative Bishop. But the bill would 鈥済ive Puerto Rico access to a court-enforced debt restructuring in exchange for the imposition of a federal fiscal oversight board,鈥� so the island would get no direct money out of the deal. 鈥淪o to say it鈥檚 a bailout, it鈥檚 obviously not just a stretch of the meaning of the word, there has to [be] an ulterior motive.鈥�
Puerto Rico鈥檚 Governor Alejandro Garcia Padilla is frustrated with Washington鈥檚 inaction because he has warned about a default on Sunday鈥檚 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. 聽聽
The island鈥檚 unemployment rate was , more than twice聽. Tens of thousands of government workers have been laid off since 2009 to cut costs and have been closed since 2014.听
These personal hardships along with others have led to Puerto Rico鈥檚 largest mass exodus in the last 50 years. The island county has witnessed in the 21st聽century, with almost seven percent occurring between 2010 and 2015.
鈥淧opulation growth was once ,鈥� explains Pew Research in a March study of population data from the US Census Bureau. 鈥淭he island鈥檚 population grew by 10% from 1980 to 1990, and by 8% from 1990 to 2000. But as the effects of a decade-long economic recession have mounted, Puerto Ricans 鈥� who are US citizens at birth 鈥� have increasingly moved to the US mainland, with many settling in Florida.鈥�
According to the Census Bureau data, economic opportunity is a primary driver for the mass outmigration: 40 percent of the island-born Puerto Ricans moving to the continental US say their main reason for moving was job-related, and another .听
But the continental US is not immune to Puerto Rico鈥檚 financial ills.听
鈥淎 massive default from Puerto Rican bonds can create ,鈥� Jose Caraballo-Cueto, Director of the Census Information Center at the University of Puerto Rico, writes for NBC News. And the new influx of Puerto Ricans to the continental US will further strain our country鈥檚 public services, adds Dr. Caraballo-Cueto, as the majority of islanders moving to the mainland are very poor. 鈥淢oreover, U.S. exports 鈥� especially agricultural products 鈥� to Puerto Rico will be reduced even further if the Great Depression of Puerto Rico deepens.鈥�
And regardless of future side effects of the island鈥檚 bankruptcy on the overall US economy, the US government has 鈥渁 shared responsibility鈥� on Puerto Rico鈥檚 crisis, notes Caraballo-Cueto. Not only has the US banned Puerto Rico鈥檚 access to federal and local bankruptcy laws that could have restructured 70 percent of the country鈥檚 debt, but it has also upheld a marine law from 1920, the Jones Act, that cripples the country鈥檚 international trading by essentially only permitting US ships to enter or leave Puerto Rican ports as all other foreign vessels are subject to absurdly high customs and import fees.
鈥淢ost people think July 1 is atomic bomb day,鈥� Sergio Marxuach, public policy director of the Center for a New Economy in Puerto Rico, tells The Washington Post. 鈥�.鈥�
