© 2023 KUNR
An illustrated mountainscape with trees and a broadcast tower.
Serving Northern Nevada and the Eastern Sierra
Play Live Radio
Next Up:
Available On Air Stations

Puerto Rico's Governor Wants Lenders To Wait For More Than $73 Billion Debt Payments

Alejandro Garcia Padilla, the governor of Puerto Rico, discussing the commonwealth's budget earlier in 2015.
Ricardo Arduengo
Alejandro Garcia Padilla, the governor of Puerto Rico, discussing the commonwealth's budget earlier in 2015.

Gov. Alejandro Garcia Padilla said Monday that international creditors need to lighten Puerto Rico's nearly $73 billion public debt burden.

In a televised speech, Garcia said, given the state of its economy, Puerto Rico's public debt is unpayable. He cited a report by a former chief economist of the World Bank that recommends lenders consider easier terms for the island. Padilla said he will go further and seek a multi-year moratorium on debt payments to allow the island time to rebuild its economy.

The governor also said he wants the law changed to make the island able to file for bankruptcy protection, Reuters reports.

" 'Puerto Rico needs a complete restructuring and development plan, comprehensive and inclusive, that takes care of the immense problem we face today, not on a short but on a long-term and definitive basis,' Garcia Padilla said. 'The alternative would be ... halting of payments with all the negative consequences that this implies.'

"Garcia Padilla said the next step must be to get creditors to agree to more favorable payment terms. He is establishing a working group to examine restructuring public debt, with a deadline to have a plan by Aug. 30. The legislature is required to approve the plan."

NPR's Jim Zarroli reported on Puerto Rico's financial situation earlier:

"With the bond markets all but closed to the commonwealth... any solution to Puerto Rico's troubles is likely to involve some type of federal help. Economist Arturo Porzecanski teaches at American University.

" 'What Greece is for the Eurozone, that's what Puerto Rico is going to become for us. It's going to become a territory that we're going to have to subsidize even more than before, get more tax breaks, eventually give federal aid.'

"But there are important differences that mitigate Puerto Rico's risk to the financial system. Puerto Rico is a tiny part of the US economy... even smaller than Greece is to the Eurozone. And because the island is a U.S. territory, its banks are already guaranteed by the Federal Deposit Insurance Corporation. That prevents the kind of bank runs now plaguing Greece."

Copyright 2021 NPR. To see more, visit https://www.npr.org.

As NPR's Miami correspondent, Greg Allen reports on the diverse issues and developments tied to the Southeast. He covers everything from breaking news to economic and political stories to arts and environmental stories. He moved into this role in 2006, after four years as NPR's Midwest correspondent.