Puerto Rico Says With Restructuring It Can Pay Off Debts
ROBERT SIEGEL, HOST:
We've been talking a lot about Greece's financial crisis, but Puerto Rico has also been on the brink of financial collapse. Hundreds of millions of dollars in debt payments were due today, and media sources say that Puerto Rico did make those payments. But it's still most likely the Commonwealth is not going to be able to pay off its entire debt, which totals $73 billion.
RACHEL MARTIN, HOST:
Earlier this week, the governor of Puerto Rico said he'll seek a moratorium on paying back the loans in order to allow Puerto Rico to rebuild its economy. To find out more about the island's debt burden and what it means for residents there, we called Luis Vega Ramos. He's a member of the Puerto Rican House of Representatives.
LUIS VEGA RAMOS: We have cut spending in great terms during during the last two and a half years. We have reformed the banking system. We have enacted new tax measures for the people of Puerto Rico so we that can have more revenue. We've reduced operating expenses of the government close to $2 billion so far. And the only element of our public expenditure that is on the rise is still the payment of our public debt.
MARTIN: To say that you cannot pay back $73 billion in debt, understanding that you're trying to restructure to be able meet some of those payments, what does this mean for Puerto Rico's ability to secure international loans in the future?
RAMOS: Well, I mean, Puerto Rico can only secure loans, through our current political situation, through the U.S. municipal bond market. And the reality is that option has been practically non-available. So, in that sense, saying what we have said practically doesn't change the possibility of Puerto Rico moving out and getting more financial loans. What we're saying is we intend to pay, but we need to restructure the nature of those payments.
MARTIN: I understand this is a complicated question, but how did this happen - $73 billion in debt?
RAMOS: Well, it's a combination of factors. Obviously, there is a financial crisis worldwide. To that, we also have to add some not-so-wise practices of borrowing money to use in operational expenditures instead of on capital improvements. And that's like using the money to pay for the mortgage in order to buy perishable items.
MARTIN: As this financial crisis in Puerto Rico has unraveled over the past few years, there's been a pretty steady exodus of Puerto Ricans to the United States and other places. Are you expecting that the fixes that you've outlined - are you expecting people to feel secure enough in Puerto Rico's future that they come home? How is this likely to affect the lives of your residents and citizens who have dispersed?
RAMOS: That's where I think our debt holders, by agreeing on new terms so that we can pay what we owe - that the money that we don't have to pay up front can be used in certain, specific investments that promote the economy of Puerto Rico. The reason of development like aeronautics, like science and technology and medical - if we get an injection that permit us to develop those very important pockets of economic development, we'll be in a better position to pay our debt holders. And we'll also be in a better position to depend less and less and less on fellow subsidies for our working poor.
MARTIN: Luis Vega Ramos is a member of the Puerto Rican House of Representatives. Thanks so much for talking with us, sir.
RAMOS: Thank you very much - a privilege. Transcript provided by NPR, Copyright NPR.