Puerto Rican government-debt crisis

Distribution of Puerto Rico's outstanding debt
Puerto Rico's budget expenses in relation to its debt obligations. Almost 9.6%—or about $1.5 billion—of Puerto Rico's central government budget expenses for FY2014 was expected to be spent on debt service.[lower-alpha 1]

The Puerto Rican debt crisis is an ongoing financial crisis related to the amount of debt owed by the government of Puerto Rico. The island has more than $70 billion USD of outstanding debt, with a debt-to-GDP ratio of about 68%.[lower-alpha 2] In February 2014, various American credit rating agencies downgraded the government's debt to non-investment grade.

The crisis has caused Puerto Rico's government to adopt policies that will ideally reduce costs drastically, increase revenues, and spark economic growth so that it can better fund its debt obligations. Puerto Rico's economy has been described as precarious, weak, and fragile, and aggravated by social distrust and unpleasantness.[lower-alpha 3][lower-alpha 4]

On August 3, 2015, Puerto Rico defaulted on a $58 million bond payment to the Public Financing Corporation, a subsidiary of the Government Development Bank, while other financial obligations were met.[4]

Background

In the beginning of the 16th century, the Spaniards colonized Puerto Rico. In 1898, Puerto Rico was ceded to the United States, at the end of the Spanish–American War. Prior to that, the people of Puerto Rico had Spanish citizenship; after Puerto Rico was no longer part of Spain, the people of Puerto Rico effectively lacked citizenship from a sovereign country after it was ceded: the people of Puerto Rico were neither Puerto Rican citizens, nor American citizens, nor Spanish citizens. Because of this, on April 12, 1900, the U.S. Congress enacted the Foraker Act, establishing Puerto Rican citizenship for people born in Puerto Rico.

Four years later, the U.S. Supreme Court reaffirmed Puerto Rican citizenship in 1904 by its ruling on Gonzales v. Williams which denied that Puerto Ricans were United States citizens and labeled them as non-citizen US nationals.[5] This ruling effectively restricted Puerto Ricans from being conscripted to US military service. Because of this and other local and mainland interests, Congress enacted the Jones–Shafroth Act on March 2, 1917, on the brink of World War I. This act granted American citizenship to the people of Puerto Rico, which allowed them to be drafted into military service.

Among the rights granted through the legislation, the Jones-Shaforth Act exempted interest payments from bonds issued by the government of Puerto Rico and its subdivisions from federal, state, and local income taxes (so called "triple tax exemption") regardless of where the bond holder resides.[lower-alpha 5][lower-alpha 6] This right made Puerto Rican bonds attractive to municipal investors.[lower-alpha 6][lower-alpha 7] This advantage strives from the restriction typically imposed by municipal bonds enjoying triple tax exemption where such exemptions solely apply for bond holders that reside in the state or municipal subdivision that issues them.

This factor led Puerto Rico to issue bonds that were always attractive to municipal investors, regardless of Puerto Rico's account balances.[lower-alpha 8] Puerto Rico thus began to issue debt to balance its budget, a practice repeated for four decades since 1973.[8] The island also began to issue debt to repay older debt, as well as refinancing older debt possessing low interest rates with debt possessing higher interest rates.[9]

It was not until Puerto Rico enlarged its outstanding debt to $71 billion USD —an amount approximately equal to 68% of Puerto Rico's gross domestic product (GDP)—that Puerto Rican bonds were downgraded to non-investment grade (better known as "junk status" or speculative grade) by three bond credit rating agencies between February 4–11, 2014.[10] This downgrade triggered bond acceleration clauses that required Puerto Rico to repay certain debt instruments within months rather than years.[lower-alpha 9] Investors were concerned that Puerto Rico would eventually default on its debt.[lower-alpha 10] Such default would reduce Puerto Rico's ability to issue bonds in the future. Puerto Rico currently states that it is unable to maintain its current operations unless it takes drastic measures that may lead to civil unrest. There have already been protests over the austerity measures.[lower-alpha 11][lower-alpha 12] These events, along with a series of governmental financial deficits and a recession, have led to Puerto Rico's current debt crisis.

Causes

Tax policy

A federal statute that contributed to the crisis was the expiration of section 936 of the U.S. Internal Revenue Code, which applied to Puerto Rico.[lower-alpha 13] This section was critical for the economy of the island as it established tax exemptions for U.S. corporations that settled in Puerto Rico and allowed its subsidiaries operating in the island to send their earnings to the parent corporation at any time, without paying federal tax on corporate income. The whole economy of the island based itself around this privilege, and has been unable to recoup after its loss.[lower-alpha 13]

Disparity in federal social funding

More than 60% of Puerto Rico's population receives Medicare or Medicaid services, with about 40% enrolled in Mi Salud, the Puerto Rican Medicaid program.[11] There is a significant disparity in federal funding for these programs when compared to the 50 states, a situation started by Congress in 1968 when it placed a cap on Medicaid funding for United States territories.[11] This has led to a situation where Puerto Rico might typically receive $373 million federal funding a year, while, for instance, Mississippi receives $3.6 billion.[11] Not only does this situation lead to an exodus of underpaid health care workers to the mainland, but the disparity has had a major impact on the finances of Puerto Rico.[11]

Triple tax exemption

Interest income paid to owners of bonds issued by the government of Puerto Rico and its subdivisions are exempt from federal, state, and local taxes (so called "triple tax exemption").[lower-alpha 6] Unlike most other US triple tax exempt bonds, Puerto Rican bonds retain tax exemption regardless of where the bond holder resides in the United States,[lower-alpha 5][lower-alpha 6][lower-alpha 7] a marketing and sales advantage consequent to the restriction typically imposed on municipal bonds with triple tax exemption in which exemptions are available to bond holders that reside within the state or municipal subdivision that issues the bonds. Triple tax exempt bonds are considered subsidized because bond issuers can offer a lower interest rate to satisfy bond holders; as a result, Puerto Rico can issue more debt.

Mismanagement and disparity

The local government has proven to be highly inefficient in terms of management and planning; with some newspapers, such as El Vocero, stating that the main problem is inefficiency rather than lack of funds.[lower-alpha 14][lower-alpha 15] As an example, the Department of Treasury of Puerto Rico is incapable of collecting 44% of the Puerto Rico Sales and Use Tax (or about $900 million USD), did not match what taxpayers reported to the department with the income reported by the taxpayer's employer through Form W-2's, and did not collect payments owned to the department by taxpayers that submitted tax returns without their corresponding payments.[lower-alpha 16][14][15] The Treasury department also tends to publish its comprehensive annual financial report (CAFR) late, sometimes 15 months after a fiscal year ends, while the government as a whole constantly fails to comply with its continuing disclosure obligations on a timely basis.[16][lower-alpha 17] Furthermore, the government's accounting, payroll and fiscal oversight information systems and processes also have deficiencies that significantly affect its ability to forecast expenditures.[lower-alpha 18]

Similarly, salaries for government employees tend to be quite disparate when compared to the private sector and other positions within the government itself. For example, a public teacher's base salary starts at $24,000 while a legislative advisor starts at $74,000. The government has also been unable to set up a system based on meritocracy, with many employees, particularly executives and administrators, simply lacking the competencies required to perform their jobs.[lower-alpha 19][lower-alpha 20]

There was a similar situation at the municipal level with 36 out of 78 municipalities experiencing a budget deficit, putting 46% of the municipalities in financial stress.[19] Just like the central government, the municipalities would issue debt through the Puerto Rico Municipal Financing Agency to stabilize its finances rather than make adjustments. In total, the combined debt carried by the municipalities of Puerto Rico account for $3.8 billion USD or about 5.5% of Puerto Rico's outstanding debt.[lower-alpha 21][lower-alpha 22]

Economic depression

Puerto Rico has been experiencing an economic depression for 11 consecutive years, starting in late 2005 after a series of deficits and the expiration of the section 936 that applied to Puerto Rico of the U.S. Internal Revenue Code. The government has also experienced 16 consecutive government deficits since 2000, exacerbating its fragile economic situation as the government issued new debt to fund the payment for maturing debt.[lower-alpha 23]

Downgrade

Puerto Rico was effectively downgraded to non-investment grade on February 4, 2014 by Standard & Poor's when it downgraded Puerto Rico's general obligation debt (GO) from BBB- status to BB+, one level below investment grade.[22] The agency cited liquidity concerns for its downgrade and maintained a negative outlook on its watch.[23] Moody's would follow three days later by downgrading Puerto Rico's GO debt on February 7, 2014 from Baa3 to Ba2, two levels below investment grade.[24] Moody's, however, cited lack of economic growth for its downgrade while assigning a negative outlook to the government's ratings. Fitch Ratings would be the last to downgrade on February 11, 2014 by downgrading Puerto Rico's GO debt from BBB- to BB, two levels below investment grade.[10] Fitch cited both liquidity concerns and lack of economic growth for its downgrade while assigning a negative outlook to the government's ratings.

Each and every one of these downgrades triggered several acceleration clauses which forced Puerto Rico to repay certain debt instruments within months rather than years.[lower-alpha 9]

2015 forbearance

On June 28, 2015, in a surprising turn of events, Governor García Padilla admitted publicly that, "the debt is not payable", and that, "[if his administration doesn't make the economy grow] we will be in a death spiral".[lower-alpha 24][lower-alpha 25] Previous to García Padilla's admittance, various government instrumentalities had already entered into forbearance agreements with their lenders but the warning still provoked a drop in Puerto Rican bonds and stocks.[26][27]

Reactions to the crisis

Local market

Around $30 billion or about 42% of Puerto Rico's outstanding debt is owned by residents of Puerto Rico.

The residents of Puerto Rico and its business people have been the ones bearing the hike in taxes and cuts performed by the government in order to stabilize its finances. Michele Caruso from CNBC reported on January 24, 2014 that, "Taxes and fees went up on nearly everything and everyone. Personal income taxes, corporate taxes, sales taxes, sin taxes, and taxes on insurance premiums were hiked or newly imposed. Retirement age for teachers was raised from as low as 47 to at least 55 for current teachers, and 62 for new teachers."—a significant cost to bear for a country with a purchasing power parity (PPP) per capita of $16,300 USD and with 41% of its population living below the poverty line.[lower-alpha 26][2]

The Legislative Assembly, together with the governor, also reduced operating deficits, and reformed the public employee's, teacher's, and judicial pension system.[lower-alpha 27] They also announced the intent to further reduce appropriations in the current fiscal year by $170 million and budget for balanced operations for the upcoming fiscal year.[lower-alpha 28]

As another countermeasure, the 17th Legislative Assembly of Puerto Rico enacted a bill on March 3, 2014 allowing the Puerto Rico Government Development Bank to issue $3.5 billion USD in bonds to recover its liquidity. The governor promptly signed the bill the day after, effectively becoming law as Act 34 of 2014 (Pub.L. 2014-34).[29][30]

U.S. municipal market

Nearly 70% of U.S.-based municipal bond funds own Puerto Rican bonds or have some kind of exposure to Puerto Rico.[lower-alpha 29] A notable cause for this tendency is the fact that Puerto Rican bonds are triple tax-exempt in all of the states regardless of where the bond holder resides.[lower-alpha 6] Despite the expected impact, preemptive measures actually slowed the damage of the downgrade's fallout.[31] When the downgrade began being perceived as imminent, investors were warned that it would affect the municipal market in general and concerns surrounding a worst-case default scenario were already being considered.[32] However, by the end of February 2014, municipal bond funds that relied on specific debt were already experiencing the backlash, leaving portfolio managers with fewer options in the market.[33] Organizations such as First Investors made it clear that they didn't intend to invest in Puerto Rico for a prolonged time period, at least until Puerto Rican bonds were restored to investment grade.[33]

Skepticism

Several experts, including Senator Ángel Rosa, have expressed that Puerto Rico's debt is simply impossible to repay, and have thus recommended that Puerto Rico should instead negotiate payback terms with bond holders.[34] Others, such as economist Joaquin Villamil, have found necessary that Puerto Rico issues debt at least once more to return liquidity to the Puerto Rico Government Development Bank and be henceforth able to repay back its debt.

Some, like House Minority Whip Jennifer González, claim the crisis is mere propaganda created so that the incumbent political party can enact, amend, and repeal laws that would otherwise be unable to justify.[lower-alpha 30][lower-alpha 31] Others, such as the President of the Senate of Puerto Rico, Eduardo Bhatia, claim the crisis was created by ruthless investors wishing to profit from credit downgrades.[36]

Proposed solutions

Restructuring of debt

The government of Puerto Rico commissioned an analysis of its financial problems asking for solutions that resulted in the "Krueger Report" published in June 2015.[37] The report called for structural and fiscal reforms as well as for a restructuring of outstanding debts.[38]

One month later, a report was published that rejected the need for debt restructuring. It was commissioned by a group of 34 hedge funds that specialize in distressed debt —sometimes referred to as vulture funds— who had hired economists with an IMF background. Their report indicated that Puerto Rico has a fixable deficit problem, not a debt problem. It recommended to improve tax collection and reduce public spending.[39] The report also recommended to consider public private partnerships and to monetize government-owned buildings and ports. The report made use of data of the Krueger Report and warned that the costs of default would be high.[39] One of the authors opined that Puerto Rico has been "massively overspending on education".[40] Detractors remark that Puerto Rico's spending on education is only 79% of U.S. average per pupil while supporters remark that when compared to Puerto Rico's GDP such spending is extraordinarily high.[40]

In response to the hedge fund report, Víctor Suárez Meléndez, chief of staff of the governor of Puerto Rico, indicated that "extreme austerity [alone] is not a viable solution for an economy already on its knees".[40]

On October 14, 2015, The Wall Street Journal reported that "U.S. and Puerto Rican authorities were discussing the possibility of issuing a "superbond" as part of a restructuring package". This plan would have a designated third party administer an account holding some of the island's tax collections and those funds would be used to pay holders of the superbond. The existing Puerto Rican bondholders would take a haircut on the value of their current bond holdings.[41]

Debt nullification

Manuel Natal and some other lawmakers have proposed not to pay that part of the debt that may have been issued in violation the Puerto Rican constitution.[42] This strategy of "debt nullification" has been used elsewhere in the U.S. and is likely to lead to a legal challenge by creditors.[42]

More autonomy

As Puerto Rico's financial problems are closely related to its ambiguous legal status under U.S. law, a proposed solution called to reconsider its political status so that either its autonomy would be enhanced or it would be entitled to have similar protections and rights as bestowed by statehood.[43]

Bailout by the US federal government

On October 15, 2015, White House spokesman Josh Earnest denied reports that the US Treasury will bail out Puerto Rico.[41]

Bankruptcy

Puerto Rico or any of its political subdivisions and agencies cannot file for debt relief under chapter 9 of the federal Bankruptcy Code because it applies only to municipalities on the mainland.[41] Puerto Rico's nonvoting representative in the US House of Representatives, Pedro Pierluisi, introduced H.R. 870 in February 2015 seeking to give Puerto Rico's public agencies and municipalities access to chapter 9. In the US Senate, members submitted similar legislation in July 2015. But, neither bill was enacted.[44] In December 2015, the New York Times addressed investments in Puerto Rico securities by major distressed-debt and other hedge funds. John Paulson’s firm Paulson & Co., Appaloosa Management founded by David Tepper, Marathon Asset Management, BlueMountain Capital Management and Monarch Alternative Capital were amongst purchasers of bonds in March 2014. The Times also traced opposition from the hedge funds, US Senator Marco Rubio, and Jenny Beth Martin of Tea Party Patriots to Congressional bills which would expand public-authority bankruptcy restructuring options.[45]

2016 Federal response: PROMESA

Main article: PROMESA

On June 30, 2016 President Obama signed the Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA, a law creating a federal oversight board that would negotiate the restructuring of Puerto Rico's debt.[46] With the protection this bill gave from lawsuits, the governor of Puerto Rico, Alejandro Garcia Padilla, suspended payments due on July 1.[46]

PROMESA will enable the island's government to enter a bankruptcy-like restructuring process and halt litigation in case of default. The task of the oversight board is to facilitate negotiations, or, if these fail, bring about a court-supervised process akin to a bankruptcy. The board is also responsible for overseeing and monitoring sustainable budgets.[46]

See also

Notes

  1. ↑ PRGDB "Financial Information and Operating Data Report to October 18, 2013" p. 142[1]
  2. ↑ Caruso Cabrera (2014) "The island, a territory of the United States, is in the midst of a debt crisis."[2]
  3. ↑ GDB (2014) "The Commonwealth’s very high level of debt may affect the performance of the economy and government revenues."[3]
  4. ↑ GDB (2014) "The Commonwealth [...] will be required to reduce the amount of resources that fund other important governmental programs and services in order to balance its budget."[3]
  5. 1 2 Pub.L. 64–145 §3 "[...] all bonds issued by the government of Porto Rico, or by its authority, shall be exempt from taxation by the government of the United States, or by the government of Porto Rico or of any political or municipal subdivision thereof, or by any state, or by any county, municipality, or other municipal subdivision of any state or territory of the United States, or by the District of Columbia."
  6. 1 2 3 4 5 Caruso Cabrera (2013) "That's because the island's bonds have what's known as "triple exemption." No matter what state you live in, if you own a Puerto Rico bond, you don't pay federal, state or local taxes on the interest."[2]
  7. 1 2 Roos "Some taxpayers also have to pay state and local income taxes, depending on where they reside. In this case, a triple tax-free municipal bond—exempt from federal, state and local taxes—is highly attractive."[6]
  8. ↑ Ismalidou; Trianni (2014) "Puerto Rico’s over-borrowing was facilitated by an eager group of U.S. investors. U.S. mutual funds were more than willing to buy Puerto Rico bonds, because the island has a special financial advantage: its bonds are triple tax-exempt [...] This created a large buyers base for Puerto Rico’s bonds, which encouraged the commonwealth to keep issuing debt."[7]
  9. 1 2 Caruso Cabrera (2014) "Moody's estimates that if Puerto Rico does get downgraded to junk status, it faces $1 billion in additional short-term costs due to collateral calls on loans that are contingent on Puerto Rico not being rated junk."[2]
  10. ↑ GDB (2014) "The Commonwealth’s liquidity has been adversely affected by recent events, and it may be unable to meet its short-term obligations."[3]
  11. ↑ GDB (2014) "If the Commonwealth’s financial condition does not improve, it may lack sufficient resources to fund all necessary governmental programs and services as well as meet debt service obligations. In such event, it may be forced to take emergency measures."[3]
  12. ↑ GDB (2014) "If the Commonwealth is unable to obtain financing through the issuance of tax and revenue anticipation notes, it may not have sufficient resources to maintain its operations."[3]
  13. 1 2 Ismalidou; Trianni (2014) "The spark that lit the fuse came in 1996, when President Clinton repealed legislation [section 936] that gave tax incentives for U.S. companies to locate facilities in Puerto Rico. The island’s economy began to sputter, and after the great recession, the decline in the island’s governmental finances continued."[7]
  14. ↑ Vera Rosa (2013; in Spanish) "Aunque Puerto Rico mueve entre el sector público y privado $15 billones en el área de salud, las deficiencias en el sistema todavía no alcanzan un nivel de eficiencia óptimo."[12]
  15. ↑ Vera Rosado (2013; in Spanish) "Para mejorar la calidad de servicio, que se impacta principalmente por deficiencias administrativas y no por falta de dinero[...]"[12]
  16. ↑ Rivera Sánchez (2014; in Spanish) "En 2012 [...] la tasa de captación en el segmento de ventas al detal fue de 52% con una tasa de evasión de 48%. En el resto de los renglones, la captación fue de 56% con una evasión de 44%."[13]
  17. ↑ GDB (2014) "On several occasions the Commonwealth has failed to comply with its continuing disclosure obligations on a timely basis. For example, the Commonwealth has failed to file the Commonwealth’s Annual Financial Report before the 305-day deadline in nine of the past twelve years, including the two most recent fiscal years (2012 and 2013)."[17]
  18. ↑ GDB (2014) "[The government's] accounting, payroll and fiscal oversight information systems and processes have deficiencies that significantly affect its ability to forecast expenditures."[3]
  19. ↑ Acevedo Denis (2013; in Spanish) "Para el profesor de la Escuela Graduada de Administración Pública de la Universidad de Puerto Rico, Rafael Torrech San Inocencio, más que una cuestión de que funcionarios del Gobierno devenguen altos salarios, es si tienen o no las competencias para los cargos que ocupan."[18]
  20. ↑ Acevedo Denis (2013; in Spanish) "Hay funcionarios bien pagados, funcionarios excesivamente pagados y funcionarios que merecen mejor paga. El problema es cómo se parean las remuneraciones con las competencias profesionales."[18]
  21. ↑ WAPA-TV (2014; in Spanish) "El informe sobre la medida señala que al presente los municipios arrastran una deuda agregada de aproximadamente $590 millones [...]"[20]
  22. ↑ PRGDB "Financial Information and Operating Data Report to October 18, 2013" p. 61[1]
  23. ↑ Walsh (2013) "In each of the last six years, Puerto Rico sold hundreds of millions of dollars of new bonds just to meet payments on its older, outstanding bonds — a red flag. It also sold $2.5 billion worth of bonds to raise cash for its troubled pension system — a risky practice — and it sold still more long-term bonds to cover its yearly budget deficits."[21]
  24. ↑ Corkery, Williams Walsh (2015) "The debt is not payable," Mr. García Padilla said. "There is no other option. I would love to have an easier option. This is not politics, this is math."[25]
  25. ↑ Corkery, Williams Walsh (2015) "My administration is doing everything not to default," Mr. García Padilla said. "But we have to make the economy grow," he added. "If not, we will be in a death spiral."[25]
  26. ↑ Quintero (2013; in Spanish) "Los indicadores de una economía débil son muchos, y la economía en Puerto Rico está sumamente debilitada, según lo evidencian la tasa de desempleo (13.5%), los altos niveles de pobreza (41.7%), los altos niveles de quiebra y la pérdida poblacional."[28]
  27. ↑ Hitchcock; Aldrete Sánchez (2014) "That the rating is not lower is due to the progress the current administration has made in reducing operating deficits, and what we view as recent success with reform of the public employee and teacher pension systems, which had been elusive in recent years."[23]
  28. ↑ Hitchcock; Aldrete Sánchez (2014) "We view the current administration's recently announced intent to further reduce appropriations in fiscal 2014 by $170 million and budget for balanced operations in fiscal 2015 as potentially leading to credit improvement in the long run [...]"[23]
  29. ↑ Caruso Cabrera (2014) "Nearly 70 percent of U.S. municipal bond funds rated by Morningstar have some kind of exposure to Puerto Rico."[2]
  30. ↑ Ruiz Kuilan (2014; in Spanish) "La portavoz de la minoría penepé en la Cámara, Jennifer González [...] sostuvo que junto con el gobernador el mensaje que se pretende difundir es uno alarmista para inquietar al País y que al final se tomen medidas menos severas. De esa forma, dijo González, el pueblo "no reacciona de una manera más agresiva" pensando que pudo ser peor."[35]
  31. ↑ Ruiz Kuilan (2014; in Spanish) ""Con un plan de medidas de control de gastos las casas acreditadoras hubieran visto que Puerto Rico mantenía un presupuesto balanceado, que no se estaba gastando más de lo que tenía." [...] sentenció la representante [Jennifer González]."[35]

References

  1. 1 2 "Financial Information and Operating Data Report to October 18, 2013" (PDF). Puerto Rico Government Development Bank. October 18, 2013. Retrieved March 4, 2014.
  2. 1 2 3 4 5 Caruso Cabrera, Michelle (January 24, 2014). "Why Puerto Rico needs to borrow money—and soon". CNBC. Retrieved March 2, 2014.
  3. 1 2 3 4 5 6 "Preliminary official statement dated march 6, 2014 subject to completion" (PDF). Puerto Rico Government Development Bank. March 6, 2014. Retrieved March 7, 2014.
  4. ↑ Williams Walsh M (August 3, 2015). "Puerto Rico Defaults on Bond Payment". New York Times. Retrieved August 4, 2015.
  5. ↑ ""They say I am not an American…": The Noncitizen National and the Law of American Empire. Christina Duffy Burnett". Opiniojuris.org. 2008-07-01. Retrieved 2014-03-02.
  6. ↑ Roos, Dave. "How Municipal Bonds Work". How Stuff Works. Retrieved March 2, 2014.
  7. 1 2 Ismailidou, Ellie; Trianni, Francesca (12 March 2014). "The Next Financial Catastrophe You Haven't Heard About Yet: Puerto Rico". Time. Retrieved 12 March 2014.
  8. ↑ "¿Cómo Puerto Rico llegó a tener crédito chatarra?". El Nuevo Día (in Spanish). February 4, 2014. Retrieved 2 March 2014.
  9. ↑ Emmanuelli Jiménez, Rolando (February 12, 2014). "¿Sabe qué provocará la degradación?". La Perla del Sur (in Spanish). Retrieved March 2, 2014.
  10. 1 2 "Fitch becomes third agency to cut Puerto Rico to junk". Reuters. February 11, 2014. Retrieved 2 March 2014.
  11. 1 2 3 4 Alvarez L, Goodnough A (August 2, 2015). "Puerto Ricans Brace for Crisis in Health Care". New York Times. Retrieved August 4, 2015.
  12. 1 2 Vera Rosado, Ileanexis (May 17, 2013). "Ineficiencia arropa a los recursos económicos de salud". El Vocero (in Spanish). Retrieved September 19, 2013.
  13. ↑ Rivera Sánchez, Maricarmen (February 3, 2014). "Hacienda pierde $900 millones del IVU". El Vocero (in Spanish). Retrieved March 7, 2014.
  14. ↑ "Hacienda espera recaudar $500 millones; mientras, atiende masiva evasión – NotiCel™". Noticel.com. 2013-03-15. Retrieved 2014-03-03.
  15. ↑ "Amnistía contributiva: aumenta recaudos, pero intesifica la evasión – NotiCel™". Noticel.com. 2013-03-17. Retrieved 2014-03-03.
  16. ↑ "Treasury Department Submits Commonwealth Of Puerto Rico Comprehensive Annual Financial Report For FY 2011–2012". PRNewswire. 16 September 2013. Retrieved 4 March 2014.
  17. ↑ "COMMONWEALTH OF PUERTO RICO QUARTERLY REPORT DATED JULY 17, 2014" (PDF). Puerto Rico Government Development Bank. 17 July 2014. Retrieved 19 July 2014.
  18. 1 2 Acevedo Denis, Ely (November 15, 2013). "Salarios públicos: Problema no es la cuantía, es la incompetencia". NotiCel (in Spanish). Retrieved March 2, 2014.
  19. ↑ Vázquez, Brenda (November 16, 2012). "Extensa la lista de los municipios con déficit". Metro Puerto Rico (in Spanish). Metro International. Retrieved September 29, 2013.
  20. ↑ "Nace la Corporación de Financiamiento Municipal" (in Spanish). WAPA-TV. January 23, 2014. Retrieved February 20, 2014.
  21. ↑ Walsh, Mary (October 7, 2013). "Worsening Debt Crisis Threatens Puerto Rico". The New York Times. Retrieved October 8, 2013.
  22. ↑ "S&P downgrades Puerto Rico debt to junk status". Reuters. 2014-02-04. Retrieved 2014-03-02.
  23. 1 2 3 Hitchcock, David; Aldrete Sánchez, Horacio (February 4, 2014). "Puerto Rico GO Rating Lowered To 'BB+'; Remains On Watch Negative" (PDF). Standard and Poor's. Retrieved March 2, 2014.
  24. ↑ "UPDATE 3-Moody's follows S&P, cuts Puerto Rico to junk". Reuters. 2014-02-07. Retrieved 2014-03-02.
  25. 1 2 Corkery, Michael; Williams Walsh, Mary (2015-06-28). "Puerto Rico's Governor Says Island's Debts Are 'Not Payable'". The New York Times. Retrieved 2015-06-29.
  26. ↑ Brown, Nick; Davies, Megan (2015-04-25). "Puerto Rico utility wins bondholder agreement for extra time". Reuters. Retrieved 2015-06-29.
  27. ↑ Corkery, Michael (2015-06-29). "Puerto Rico's Bonds Drop on Governor's Warning About Debt". The New York Times. Retrieved 2015-06-29.
  28. ↑ Quintero, Laura (September 14, 2013). "Las estadísticas hablan: Puerto Rico camino a ser el "Detroit del Caribe"". NotiCel (in Spanish). Retrieved January 22, 2014.
  29. ↑ "AGP firma ley emisión de bonos" (in Spanish). Metro International. March 4, 2014. Retrieved March 4, 2014.
  30. ↑ Act No. 34 of 2014 (in Spanish). Retrieved on 13 March 2014.
  31. ↑ Michael Aneiro (2014-02-21). "Muni Market Still Unfazed By Puerto Rico Junk Downgrades". Barron's. Retrieved 2014-03-03.
  32. ↑ John Waggoner (2013-11-06). "How Puerto Rico's debt woes affect fund investors". USA Today. Retrieved 2014-03-03.
  33. 1 2 Tim McLaughlin (28 February 2014). "Puerto Rico debt woes choke bond supply for some municipal funds". Reuters. Retrieved 3 March 2014.
  34. ↑ "Voto Explicativo PC 1696 – Google Drive". Docs.google.com. Retrieved 2014-03-03.
  35. 1 2 Ruiz Kuilan, Gloria (March 4, 2014). "Asoma una reestructuración completa del gobierno". El Nuevo Día (in Spanish). Retrieved March 4, 2014.
  36. ↑ Bhatia, Eduardo (January 5, 2014). "Twitter / eduardobhatia: @Convertbond And finally, you ...". Twitter. Retrieved March 4, 2014. You [Lawrence McDonald] seem to be part of the hedgefund vultures that hope to gain from Puerto Rico's debt. That is your agenda, not mine.
  37. ↑ Clark, Greg (2015-08-05). "Puerto Rico's Leaders: Playing Games Or Out of Touch?". Forbes. Retrieved 2015-08-06.
  38. ↑ Krueger AO, Teja R, Wolfe A (June 29, 2015). "Puerto Rico – A Way Forward" (PDF). Commonwealth of Puerto Rico. Retrieved July 29, 2015.
  39. 1 2 Fajgenbaum J, Guzman J, Loser C (2015). "For Puerto Rico, There is a Better Way" (PDF). Centennial Group. Retrieved July 29, 2015.
  40. 1 2 3 Neate, Rupert (July 28, 2015). "Hedge funds tell Puerto Rico: lay off teachers and close schools to pay us back". The Guardian. Retrieved July 29, 2015.
  41. 1 2 3 Hoke, William (October 2015). "FEDERAL ROLE IN PUERTO RICAN DEBT CRISIS UNCLEAR". Tax Notes Today (2015 TNT 203-8).
  42. 1 2 Paul Abowd (October 24, 2015). "Puerto Rico considers simple solution to debt crisis: Don't pay". Al Jazeera. Retrieved October 27, 2015.
  43. ↑ Carl Meacham (August 5, 2015). "Puerto Rico Debt: Is Becoming the 51st State the Answer?". Newsweek. Retrieved August 7, 2015.
  44. ↑ Lucero, Kat (July 2015). "DESPITE CRISIS, PUERTO RICO TAX REFORM NOT BEING CONSIDERED". Tax Notes Today (2015 TNT 136-6).
  45. ↑ Mahler, Jonathan, and Nicholas Confessore, "Inside the Billion-Dollar Battle for Puerto Rico’s Future", New York Times, December 19, 2015. Retrieved 2015-12-19.
  46. 1 2 3 Nick Brown (June 30, 2016). "Puerto Rico authorizes debt payment suspension; Obama signs rescue bill". Reuters. Retrieved July 2, 2016.
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