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].