Unless the United States Congress acts to modify Puerto Rico's required debt payments, Puerto Rico won't make the full May bond payment, Puerto Rico Gov. Alejandro García Padilla said.
The governor said his government lacked the money in his annual state of the commonwealth speech, delivered Monday. Puerto Rico public sector entities owe $432 million in May, Bloomberg Briefs reported. The money is due overwhelmingly from the Government Development Bank for Puerto Rico, according to Moody's Investors Service.
The governor spoke of achievements during his first three years in office. He said that murders fell 50% and serious crimes 27% since 2011. Government spending dropped 22% since fiscal 2012-2013, he said.
"However, some of these gains could be at risk if we do not achieve a solution to the fiscal crisis allowing a restructuring of central government and public corporation debts," García Padilla said. "If Congress does not act, in May loans are due that other [previous] governments took out without seeking sufficient income to afford them," he said. "There is no money to make those payments. We would have to stop paying the police, or teachers, or firefighters, or nurses in the Medical Center."
García Padilla said if the government doesn't make the payment, he anticipated law suits in and outside of Puerto Rico. "Puerto Rico has to unite in one voice before Congress and before our creditors," García Padilla said. "The effort we undertook last year and that in December won us a commitment from the [House Speaker Paul Ryan, R-Wis.] now requires greater intensity and unity of purpose. It requires unity for the pensions of our retirees. It demands unity for ordinary people."
García Padilla said some U.S. politicians and Wall Street financiers are using the fact that Puerto Rico's financial statements are late as an tactic to delay responding to "an obvious fiscal crisis." Some of them are doing so "because they are accustomed to being lied to, others because they like to lie," he said. "I can understand the gluttony of a sector of Wall Street, because they like to lie. I can understand the gluttony of a sector of Wall Street, because their interests are different. What I cannot understand is that Puerto Rican politicians have joined Wall Street against Puerto Rico."
