U.S. Senator Maria Cantwell (D-Wash.), ranking member of the Senate Energy and Natural Resources Committee, along with Minority Leader Harry Reid and 44 other Democrats and Independents in the Senate, wrote to Leader Mitch McConnell urging bipartisan, legislative action to give Puerto Rico access to the appropriate financial restructuring tools.
“Puerto Rico is facing severe economic, fiscal and liquidity challenges that are placing immediate and growing hardships on the island’s 3.5 million U.S.-citizen residents,” the group of lawmakers said in the letter.
“For Puerto Rico to have any chance of rebuilding its economy, Congress must pass legislation to provide them with appropriate restructuring tools to respond to their economic and humanitarian crisis,” the group noted, urging McConnell to match U.S. Speaker of the House Paul Ryan’s “commitment to act on a responsible solution by the end of the first quarter of this year.”
Providing Puerto Rico with restructuring tools would not be a first. Puerto Rico was included in Chapter 9 of the U.S. Bankruptcy Code until 1984, when Congress inexplicably excluded it from the nationwide approach to resolving municipal insolvency, the lawmakers said.
Puerto Rico has been in a recession for more than 10 years, and unemployment remains high, at more than 12 percent. Forty-five percent of the population is living in poverty, of which 58 percent are children.
Despite significant budget cuts, tax increases and additional fiscal discipline measures, the declining population and shrinking tax base are resulting in decreasing revenues.
“The Puerto Rican government has been borrowing to maintain services, but it is almost certain that Puerto Rico will be unable to make its upcoming $469 million in payments due to bondholders in May and $1.9 billion in payments to bondholders in July,” the lawmakers said.
The joint letter from stateside lawmakers in support of the island’s problems drew a reaction from the Puerto Rico Private Sector Coalition, which has been active in Washington, meeting with Democrat and Republican lawmakers on the island’s fiscal status, said Francisco Montalvo, coordinator of the group.
“We have emphasized that Congress should provide fiscal and economic development tools so that more than 3.5 million Americans living on the island can cope with the fiscal crisis that has been affecting us for several years, by promoting the development of practical and effective solutions to the current fiscal situation and formulating a longer-term plan for a competitive, productive and self-sufficient economy,” Montalvo said.
The Coalition, which will travel to the Capitol the week of Feb. 8, supports Chapter 9 for Puerto Rico, in combination with accountability through an oversight board. It also supports including representation from Puerto Rico’s private sector in the board’s decision-making process.