Puerto Rico Governor Alejandro Garcia Padilla’s declaration of a state of emergency at the Government Development Bank to halt the erosion of the bank’s dwindling cash by allowing withdrawals only to fund health, public safety and education services is raising the risk for creditors as the island heads toward default, Bloomberg News reported today.
Puerto Rico in Distress
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Puerto Rico is playing brinkmanship with creditors by threatening a default that could reverberate through financial markets and the refugee state of Florida, according to an editorial in today’s Wall Street Journal. Congress may need to save the island from itself, if only to minimize the collateral damage, according to the editorial.
Investors in Puerto Rican bonds are pushing competing agendas in Washington, D.C., over whether the struggling U.S. territory should be allowed to force debt cuts on creditors, ahead of new draft legislation expected this week from House Republicans, Reuters reported yesterday.
Puerto Rico took steps yesterday toward a unilateral moratorium on all government debt payments, rejecting efforts in Washington to allow it to restructure only under close federal supervision, the New York Times reported today. The Puerto Rican Senate authorized a declaration of emergency and a debt moratorium at around 3 a.m., after hours of debate.
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The Financial Oversight and Management Board for Puerto Rico was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. The Board consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. Access information on the Board, documents, videos of meetings, calendar of events and live webcasts by clicking here.