Puerto Rico, a commonwealth estimated to have roughly US$72 billion in debts, announced this week that the accumulated debt simply cannot be paid.
Governor Garcia Padilla stated:
“The debt is not payable. There is no other option. I would love to have an easier option. This is not politics, this is math.”
As a commonwealth, however, Puerto Rico does not have the option to declare themselves bankrupt. Most of the debt is based on mutual funds or other investments led by individual investors in the U.S., and is therefore difficult to handle or negotiate.
Instead, Governor Padilla and his government are passing their responsibilities onto the island’s inhabitants by significantly increasing taxes and pension cuts. Now the island’s creditors are forced to “share the sacrifices” and pay for the faults of its government, while Padilla decides not to initiate loans or negotiations to address urgent budget deficits.
“If they don’t come to the table, it will be bad for them,” explained Padilla, who addressed the financial crisis of the island on television on June 30. He added:
“What will happen is that our economy will get into a worse situation and we’ll have less money to pay them. They will be shooting themselves