debt

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Activists Draw Attention to Puerto Rico’s Plight

Organize now
Frederick Vélez of Organize Now urges elected officials to take Puerto Rico’s fiscal plight seriously. /photo by Maria Padilla

As expected Puerto Rico this week defaulted on $422 million in debt, while Congress is no closer to reaching an agreement on a debt restructuring.

To draw attention to the island’s ongoing fiscal plight, Gov. Alejandro García Padilla made a 10-minute address to the island in which he pleaded that Puerto Rico could do no more, Treasury Secretary Jack Lew sent a letter to Congress imploring it to act and local activists pushed for solidarity among local elected officials on behalf of Puerto Rico.

“All elected officials need to take this crisis seriously,” said Frederick Vélez, lead organizer for Latino affairs at Organize Now, who formerly worked for Cong. José Serrano (D-NY) and arrived in Orlando just two weeks ago. “We need a plan so that we know that we’re being taken seriously,” he stated outside the Centro Borinqueño in east Orange County, where Organize Now held a press conference.

Organize Now has collected over 3,000 signatures on a petition pressing for no further cuts in education, pensions, healthcare and other essential services on the island. The organization said it would send the petition to federal, state and local elected officials.

“Today there’s a community here that’s going to make sure all Puerto Ricans are going to vote in the next election,” said labor organizer Jimmy Torres-Vélez, who is part of the coalition. “We are going to require that city and county commissioners have a stand on Puerto Rico.”

State Rep. Víctor Torres (D-48) pointed out that he and others earlier attempted to pass a resolution in symbolic support of Puerto Rico in the State House but it failed. “The House leadership wouldn’t support it so it didn’t happen,” he said, adding that support for the island is a “no brainer.”

In Congress, meanwhile, Republicans and Democrats are wide apart on the issues, particularly on imposing a financial control board of mostly outsiders to oversee Puerto Rico’s finances – Republicans are for it, Democrats are against.

In his letter to Congress Treasury Secretary Lew stated, “Absent enactment of a workable framework for restructuring Puerto Rico’s debts, bondholders will experience a lengthy, disorderly, and chaotic unwinding, with non-payment for many a real possibility.”

Thus far, Puerto Rico has defaulted on $1.9 billion of $72 billion in debt, according to the U.S. Treasury. Another $1 billion is due in July. This week’s default technically involved about $389 million because the island reached an accord with some debtors to delay payment.

A shrinking tax base due to historic-level migration is making the situation worse. More than 112,000 people fled the island in the first 10 months of 2015, according to the latest reports. Florida is the No. 1 destination and Central Florida, in particular, is home to the highest concentration of Puerto Ricans in the state.

There are 1 million Puerto Ricans living in Florida, which has experienced a significant jump in the population group since 2010.

˜˜Maria Padilla, Editor

Puerto Rico Debt Crisis Enters Critical Phase

San Juan cruise ship
A cruise ship passes through San Juan Bay. Puerto Rico’s finances have become unmoored. / PR Tourism Co.

Puerto Rico’s debt situation reaches a critical point May 1, the date a $425 million debt payment comes due.  Of course, the island – already spending about one third of its budget to pay debt, at great cost to government services – has no money. It has $72 billion in debt and an economy that will be in recession for 10 years come May, a trend quickly becoming known as “the lost decade.”

Congress has proposed a plan that calls for a financial oversight board, controlled mainly by outsiders, to which Puerto Rico objects, although it looks likely to remain part of the bill since trust between Washington and San Juan has seriously eroded. There are other parts of the bill that Puerto Rico finds objectionable, such as a two-tiered minimum wage (a mostly Republican idea that voters are beginning to see enacted elsewhere, such as Democratic New York).

In recent days the Wall Street Journal and the New York Times each have editorialized in favor of a more tempered proposal, one not so influenced by the hedge funds that bought Puerto Rico bonds at big discount late in the game and are looking for a big payday. Neither newspaper, however, would do away with the financial control board, which would be similar to the one Washington, D.C. labored under for several years. Each paper considers the debt restructuring provision of the bill too lengthy and onerous.

Puerto Rico and Puerto Ricans living stateside have been lobbying for extension of federal bankruptcy laws to Puerto Rico that would be applicable to certain heavily-indebted agencies (not the entire island, as has been misrepresented).

This is where the Florida connection comes in.

The WSJ warned in its editorial, titled “Puerto Rico on the Brink”: “Republicans can do nothing, watch Puerto Rico default and slide into a deep recession while Democrats exploit the issue. Adiós to Florida’s 29 electoral votes and Marco Rubio ’s Senate seat.” About 1 million Puerto Ricans reside in Florida, nearly rivaling the Cuban population.

Cue the NY Times (“Only Congress Can Rescue Puerto Rico”): “If Congress does not act now, Puerto Rico’s financial crisis could drag on for years. The island’s government would have to cut more public services, and more of the island’s 3.5 million people would seek a better life on the mainland.” Over  112,000 Puerto Ricans migrated to the states from the island in the first 10 months of 2015.

Stay tuned.

˜˜María Padilla, Editor

Another Record Migration Year for Puerto Rico

The San Juan airport. / photo PR Tourism Co.
The San Juan airport, also known as the Luis Muñoz Marín International Airport. / photo PR Tourism Co.

NEW  figures point to another year of record migration from Puerto Rico to the United States in 2015. In the first 10 months of 2015 about 112,500 more people left the island than arrived in Puerto Rico, according to a recent report by Ricardo Cortés Chico in El Nuevo Día, Puerto Rico’s main newspaper.

The figures do not include the last two months of 2015, but even so they already top the 84,000 people who reportedly left the island in all of  2014,  reflecting a stagnant economy and government belt tightening in order to make payments on $72 billion in debt.

The people movement – based on the passenger traffic through the island’s principal airports in San Juan, Aguadilla and Ponce – is believed to be an indicator of migration.

The 112,500 outmigration would indicate that more than 11,000 people are leaving the island each month.

The 2015 migration also equals the entire population of some island towns – combined. The exodus “would be comparable to the nearly complete disappearance of the populations of  Arecibo and Cataño,”  Cortés Chico wrote.

Puerto Rico has reported more outmigration than immigration since 2006, considered the start of an ongoing economic recession.  In fact, the long recession will hit 10 years in May. But beginning in 2011, about 50,000 or more people have left the island each year, accounting for a conservative outmigration of 250,000 in that five-year period, based on Pew Hispanic Research data.  El Nuevo Día‘s report is based on data from the federal Bureau of Transportation Statistics.

Florida is the No. 1 destination for outbound Puerto Ricans, surpassing the traditional Puerto Rican migrant center of New York. In fact, the Florida now counts over 1 million Puerto Ricans, more than any other state, thanks also to the migration of Puerto Ricans from the Mid Atlantic corridor to the Sunshine State. Central Florida has the highest concentration of Puerto Ricans in the state.

PR outmigration 2005- 2014
From January through October 2015, another 112,500 people are reported to have left Puerto Rico for the states. / Pew Hispanic Research 

Puerto Rico continues to negotiate payment of its $72 billion debt with creditors as well as Congress,  where the island is pushing to be included under federal bankruptcy laws. Congress, however, is intent on creating a financial control board to oversee the island’s financial affairs.

Puerto Rico Offers 74 Cents on the Dollar

 

La Fortaleza
La Fortaleza, headquarters of the government of Puerto Rico. /La Fortaleza

Puerto Rico offered to pay 74 cents on the dollar to holders of its most secure bonds, or those guaranteed by the island’s constitution. Investors in less secure bonds would get between 57 cents and 36 cents.

That proposal covers about $49 billion of the island’s total $72 billion in debt, and is sweeter than an earlier plan that affected only $26 billion in debt. For comparison purposes, Argentina last month offered 75 cents on the dollar to bondholders of $4.65 billion in debt – and it was accepted, ending years of tension.

The clock is ticking as Puerto Rico owes two upcoming debt payments – $422 million on May 1 and $2 billion in July. Debt payments are soaking up nearly one-third of Puerto Rico’s operating funds, affecting public services.

The island’s debt crisis affects Florida, home to the largest concentration of Puerto Ricans in the states. The largest number lives right here in Central Florida, where thousands start over each year. (Puerto Rico has been in an economic recession for 10 years.) And it has spilled over to the presidential campaign, as candidates propose solutions to appeal to Puerto Rican voters.

In 2015 Puerto Rico defaulted on lesser amounts of debt, generating lawsuits. A new default would likely  generate more court action.

Last month Congress proposed legislation to alleviate the island’s financial crisis, including creating a financial oversight board that many islanders consider a “takeover” and a violation of Puerto Rico’s limited self government. Puerto Rico wants some island agencies to be able to declare federal bankruptcy, a proposal rejected by Congress and major debtors who call it a “bailout.”

The U.S. Supreme Court will decide later this year whether Puerto Rico agencies can declare bankruptcy under local law.

˜˜Maria Padilla, Editor