Commonwealth quickly running out of cash
by Heather Gillers
Market Watch
Puerto Rico’s Government Development Bank doesn’t plan to make most of a $422 million debt payment due Monday, a step that could move the island’s financial crisis to a new level.
“Faced with the inability to meet the demands of our creditors and the needs of our people, I had to make a choice,” Gov. Alejandro Garcia Padilla said in a speech Sunday night, according to an English translation of the remarks. He said making the payment would divert money needed for crucial health and public-safety services.
A law enacted by Puerto Rico’s government in April empowers Garcia Padilla to suspend debt payments to pay for essential services as the U.S. commonwealth awaits help from Congress. Some of Puerto Rico’s creditors have criticized the law, saying the government won’t commit to necessary financial changes and hasn’t made a good-faith effort at a consensual restructuring.