USA-PUERTO RICO/TREASURY Puerto Rico faces humanitarian crisis without federal action - Treasury

Record ID: 134984

  • Title: USA-PUERTO RICO/TREASURY Puerto Rico faces humanitarian crisis without federal action - Treasury
  • Date: 22nd October 2015
  • Summary: SAN JUAN, PUERTO RICO (FILE) (REUTERS) VARIOUS OF STREETS IN OLD SAN JUAN PEOPLE WALKING PAST BUILDING WITH "FOR SALE" SIGN TIGHT SHOT "FOR SALE" SIGN
  • Embargoed: 6th November 2015 12:00
  • Keywords:
  • Location: Puerto Rico
  • Country: Puerto Rico
  • Topics: General
  • Reuters ID: LVAC6OW4GCSRGLN91DV6QGH6UTKV
  • Aspect Ratio: 16:9
  • Story Text: U.S. Treasury Secretary counselor Antonio Weiss warned that Puerto Rico faces a humanitarian crisis without federal action, as he appealed to Congress to help the debt-ridden U.S. territory, in comments to a Senate committee hearing on Thursday (October 22).
    "I can tell you with total confidence the Puerto Rico's fiscal crisis is escalating and it is very real and without federal action it could easily become a humanitarian crisis as well," Weiss said.
    Puerto Rico, a U.S. territory home to 3.5 million, is buckling under $72 billion in debt and a 45 percent poverty rate. With financial creditors resisting reductions to debt payments and political gridlock threatening proposed spending reforms, some Puerto Rican leaders have called on the U.S. government to step in.
    Weiss said that without action by Congress, Puerto Rico's crisis would escalate.
    He repeated the key points of a plan released by the Treasury on Wednesday, saying Congress should provide tools for Puerto Rico to restructure its liabilities, increase Medicaid support and boost economic growth through tax credits.
    A key element of Treasury's proposal is its endorsement of extending bankruptcy protections not only to Puerto Rico's public agencies, but to the island's government itself - a notion championed by some Puerto Rican leaders but seen as too radical to be politically practical.
    Cities, towns and municipal agencies can file for under the U.S. Chapter 9 bankruptcy code, while states cannot. Puerto Rico is exempt from Chapter 9 because it is a commonwealth.
    "Congress should pass legislation already introduced that provides Chapter 9 protections to Puerto Rico's municipalities and public corporations, but Congress could also authorize a broader legal framework that allows for a comprehensive restructuring of all of Puerto Rico's outstanding debt," Weiss said.
    The island's governor, Alejandro Garcia Padilla, said 2014 audited financial figures should be ready in the coming weeks or months and said the Commonwealth was putting pressure on auditors to deliver the report.
    "We have never asked Congress for a bailout and we are not seeking one today. We ask for access to a legal framework to restructure out liabilities," he told the committee on Thursday.
    Padilla said Puerto Rico may have to decide between paying its creditors or essential services, in which case it would "have no choice but to default."
    The White House said on Thursday that the Obama administration has leveraged all of its power to help support Puerto Rico as it copes with a fiscal crisis.
    White House spokesman Eric Schultz said the Puerto Rican fiscal crisis needs a congressional response.
    "It has also become clear that, while that process of leveraging existing federal resources continues that this is a crisis that is severe and is not going to be solved by administration alone," he said.
    The island defaulted on part of its debt in August.
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