Puerto Rico Desperately Needs US Help to Handle Debt

By Staff Writer

Mar 01, 2016 07:06 AM EST

Puerto Rico, the island territory of U.S. is facing debt the crisis. U.S. officials have alarmed about the debt, while governor Alejandro Garcia Padilla reiterated debt moratorium warning.

Governor Alejandro Garcia Padilla reiterated that his government may stop making payments as soon as May on $70 billion in debt, unless U.S. assist the commonwealth's efforts to restructure its obligations. In his State of the Commonwealth speech in San Juan, as quoted by Bloomberg, governor Padilla said, "We have to solve this problem this year."

He also pleaded, "If the Congress doesn't act, in May bond payments will not be made. We would have to stop paying police officers, medical workers, and firemen. Under this situation, I will pay government workers."

U.S. lawmakers is considering option to allow federal government play more central role in the Puerto Rico debt crisis, which began to escalate in June. At that time, governor Padilla had mentioned the Puerto RIco's government could not afford to pay its debt.

The commonwealth of Puerto Rico has already defaulted on some securities and the governor has warned that he may declare moratorium if federal government do not act to help. Governor Garcia Padilla repeated the warning in his speech, as its retirement system has only about $2 billion of assets while its liabilities is at $46 billion.

On Monday, the governor sent letter to U.S. House of Representatives Speaker Paul Ryan via email, stating that Puerto Rico will finish its much-delayed audited financial statements for 2014 by April. Reuters reported that governor also explained the reason of delay because of the "complexities posed by our current financial crisis."

He also explained further issue which require what he called as "adjustment to such timetable." As financial draft which released last week citing a substantial doubt in the government ability to continue, and KPMG as the auditor has not approved the draft. Republican Congressmen had also criticized the delay and lack of financial transparency from Garcia Padilla's administration.

Puerto Rico hoped to receive legislative aid from U.S. Congress to handle its $70 million debt and other issue such as population issues, because many residents are fleeing to mainland U.S. to escape poverty. Paul Ryan has called House of Representatives to propose legislation by the end of March addressing Puerto Rico.

Senior official at U.S. Treasury Department also considered the urgency to help Puerto Rico. As CNBC reported, the third-ranking official at the Treasury Department Anthony Weiss during a hearing for the House of Natural Resources Committee said, "The urgency could not be more apparent. What started as a recession has turned into a fiscal and liquidity crisis that shows signs of becoming a humanitarian one as well."

Puerto Rico is in dire need from U.S. to help the commonwealth island escaping the debt. While U.S. lawmakers also insisted more financial transparency by the administration.

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