SAN JUAN – Puerto Rican Gov. Alejandro Garcia Padilla said on Wednesday that the cash-strapped U.S. commonwealth would default on $470 million in bond payments due on Monday.
“On Monday, there’ll be a default. I’m saying that today,” the governor told reporters after participating in a ceremony in San Juan.
He added that it would be difficult “between now and Monday to come up with $470 million,” $422 million of which is owed by the Government Development Bank.
That would be the island’s largest missed bond payment, far exceeding a $58 million missed payment last August.
“We’re working with creditors on an agreement so Puerto Rico is less affected, but I don’t think an agreement that averts a default will be achieved,” said Garcia Padilla, who earlier this month signed a moratorium law that allows him to suspend debt payments if the GDB’s bond payment due May 1 is not deferred.
Public Affairs Secretary Jesus Manuel Ortiz, for his part, said the government was calling for unity among Puerto Ricans as the island seeks U.S. congressional approval of legislation that would enable it to orderly restructure its roughly $70 billion debt load.
A bill now before the U.S. House of Representatives that would create an oversight board to control the territory’s finances has been rejected by Garcia Padilla’s administration, which says it would infringe on the authority of the island’s elected government.
In a proposal unveiled last October, the Obama administration urged Congress to “move swiftly to pass pending legislation that provides Chapter 9 protection to Puerto Rican municipalities.”
The House bill appears to be an alternate solution that does not change U.S. law, which bars American states and territories (and local governments in U.S. territories) from seeking protection in federal bankruptcy court.
Puerto Rico has been in recession for a decade, and 45 percent of the island’s population is currently below the poverty line by mainland U.S. standards.
An average of 166 people leave the island every day in search of better prospects, an outmigration that has led a 10 percent reduction in the commonwealth’s population over the past decade.