Debt service will consume less than 17 percent of Puerto Rico’s consolidated budget this fiscal year, according to an op-ed in today’s Wall Street Journal. In the general-fund budget, which does not include government-owned corporations and agencies, debt service is below 16 percent. Neither number sounds like grounds for declaring bankruptcy.
Puerto Rico in Distress
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Puerto Rico Government Development Bank’s disclosure of its available cash is leaving investors wondering if they’ll be paid on Dec. 1, Bloomberg News reported yesterday. The bank, which oversees the island’s borrowings, had $875 million of net liquidity as of Sept. 30, according to a posting Wednesday on the agency’s website.
A bond default by Puerto Rico won’t derail the $3.7 trillion municipal-bond market as the investor base for the commonwealth’s securities has shifted to hedge funds from individuals and mutual funds, according to Tom Metzold, a managing director at National Public Finance Guarantee, which insures some of the debt, Bloomberg News reported yesterday.
Puerto Rico has little to gain from reforms that increase economic growth if the extra resources will all go to its creditors, according to a commentary from Larry Summers, a former treasury secretary and director of the National Economic Council in the White House, in today’s Washington Post.
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The Financial Oversight and Management Board for Puerto Rico was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. The Board consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. Access information on the Board, documents, videos of meetings, calendar of events and live webcasts by clicking here.