Puerto Rican government-debt crisis

The Puerto Rican government-debt crisis was a financial crisis affecting the government of Puerto Rico.[a] The crisis began in 2014 when three major credit agencies downgraded several bond issues by Puerto Rico to "junk status" after the government was unable to demonstrate that it could pay its debt. The downgrades, in turn, prevented the government from selling more bonds in the open market. Unable to obtain the funding to cover its budget imbalance, the government began using its savings to pay its debt while warning that those savings would eventually be exhausted. To prevent such a scenario, the United States Congress enacted a law known as PROMESA, which appointed an oversight board with ultimate control over the Commonwealth's budget. As the PROMESA board began to exert that control, the Puerto Rican government sought to increase revenues and reduce its expenses by increasing taxes while curtailing public services and reducing government pensions. These measures provoked social distrust and unrest, further compounding the crisis. In August 2018, a debt investigation report of the Financial Oversight and management board for Puerto Rico reported the Commonwealth had $74 billion in bond debt and $49 billion in unfunded pension liabilities as of May 2017.[2] Puerto Rico officially exited bankruptcy on March 15, 2022.[3][4]

  1. ^ Caruso Cabrera, Michelle (January 24, 2014). "Why Puerto Rico needs to borrow money—and soon". CNBC. Archived from the original on February 22, 2014. Retrieved March 2, 2014.
  2. ^ Bradford, Hazel (August 21, 2018). "Puerto Rico has 'catastrophic' levels of debt – report". Pensions & Investments. Crain Communications Inc. Retrieved August 22, 2018.
  3. ^ "Puerto Rico formally exits bankruptcy following largest public debt restructuring". NBC News. Retrieved March 16, 2022.
  4. ^ "Puerto Rico exits bankruptcy after grueling debt negotiation". ABC News. Retrieved March 16, 2022.


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