A Collaboration with the University of Pittsburgh

Puerto Rico legislature approves bill for fiscal emergency

[JURIST] The Puerto Rico legislature passed a bill [materials, in Spanish] on Wednesday that would allow the island territory to enter into a state of fiscal emergency and begin the process toward a debt moratorium. The bill [text, PDF, in Spanish] would allow the moratorium, primarily concerned with the debt of the Government Development Bank for Puerto Rico, to be in effect for nearly a year. At this point, Governor Alejandro Garcia Padilla has yet to sign the measure. The opposition has expressed that challenges to the constitutionality [AP report] of the bill are forthcoming.

At the end of 2015, Puerto Rico was $70 billion dollars in debt. The governor anticipated a government default [Bloomberg report] in 2016, which came to fruition [NYT report] on January 4. The territory has been suffering from a massive recession [BBC report] since 2006, nearly a decade before Padilla announced that Puerto Rico was unable to pay its debts. However, the Puerto Rico Electronic Power Authority, a major player in the economic crisis, reached a deal [Bloomberg report] to restructure its debt in December. This deal is the first of many restructuring plans to alleviate the government's debt. In February, the Puerto Rico Legislature passed a bill [text, PDF, in Spanish] that would restructure the island's estimated $9 billion debt [JURIST report].

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.