SAN JUAN – Puerto Rico’s outgoing governor said on Tuesday that the island’s massive debt load needed to be restructured and that the financial control board established by Washington to oversee that process should not impose economically damaging austerity measures.
Alejandro Garcia Padilla, who will step down on Jan. 2, said at a forum in Washington on the US commonwealth’s present situation and future outlook that the control board threatened the right to self-government enshrined in the island’s constitution.
“Our future depends on the outcome of a bankruptcy process that has not yet been approved by a Federal Control Board,” the governor of the PPD party said, adding that that body had changed the legally accepted distribution of powers.
Garcia Padilla, as he has on numerous occasions, said that the commonwealth’s roughly $70 billion debt load is unpayable.
The governor stressed that a debt moratorium under the so-called Promesa rescue law, which the US Congress approved last summer to provide a solution to the island’s debt crisis, was set to expire on Feb. 15.
From that date forward, he said, the government could be exposed to creditor lawsuits that may eventually lead to a shutdown of government operations due to a lack of liquidity.
“There’s no excuse for forcing Puerto Rico into an economic depression,” Garcia Padilla said, recalling that two months ago he submitted a fiscal plan to the financial control board that was rejected.
He said the path of seeking high-interest loans and implementing new austerity measures was unsustainable and would damage the economy, reduce tax revenues and infringe on the island’s ability to repay its debt.
“If the new administration decides to opt for austerity Puerto Rico will soon enter a downward spiral,” he said, referring to the incoming PNP government of Ricardo Rossello, who will take office in January.
Rossello sees statehood as crucial to resolving the recession-racked island’s economic woes.
Statehood is the traditional PNP position, while the PPD wants to maintain Puerto Rico’s current political status as a US commonwealth.