Puerto Rico will soon be insolvent.
The United States island territory will run out of cash by October 31, warns Treasury Secretary Raul Maldonado. Puerto Rico will then shut its government doors, temporarily suspend hurricane recovery and cease collecting sales tax for at least one month because it doesn’t have electricity.
According to Bloomberg, Puerto Rico had been spending $1.6 billion it had on hurricane relief, but those funds are gone. The island says that it needs emergency funds from the U.S. government – he pegs the number somewhere between $6 billion and $8 billion to help keep the government running for the rest of the year.
President Donald Trump stated earlier this week that Puerto Rico’s debt could be “wiped out” in the aftermath of Hurricane Maria.
“I don’t have any collections, and we are spending a lot of money providing direct assistance for the emergency,” he said in an interview. “Without the assistance from Congress, Puerto Rico’s government will not be able to operate next month.”
Meanwhile, Governor Ricardo Rossello, who was praised by the president, stated that money is running out “very quickly.”
“You have conservatively over 100,000 homes that are destroyed here,” the governor noted. “Essentially you’re looking at zero revenue for the next couple of months. While you have zero revenue, you still have expenditures, plus emergency expenditures. That means the money is going to run out very quickly.
Early indications from Senate Majority Leader Mitch McConnell, House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer suggest that Congress may step in and provide assistance and cooperation.
Puerto Rico’s debt woes have crippled the territory for years amid failed government policies, The Jones Act and wasteful spending.
Puerto Rico’s debt restructuring easily overshadows other cases in the $3.8 trillion municipal bond market. https://t.co/L80qjrvQJO pic.twitter.com/o31Ih1IxKc
— MarketWatch (@MarketWatch) October 5, 2017
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