Madagascar Development

Puerto Rico’s status as a U.S. territory creates unique challenges, some of which must be confronted to resolve its debt crisis. The good news is that policymakers do not have to reinvent the wheel to solve Puerto Rico’s current crisis—in fact, the Obama administration’s plan to deal with Puerto Rico is straightforward because it consists of steps previously taken in cities and states across the United States. When many Americans think of Puerto Rico, they think of the beach resorts that are advertised on the mainland as the heart of the island’s local economy. In fact, Puerto Rico has a manufacturing-heavy economy that has been heavily depressed for nearly 10 years , in part as an unintended consequence of a change in federal tax policy . The Obama administration’s plan should be lauded for not falling into the austerity trap that has cost Europe a lost decade and instead recognizing that policies that promote economic growth are a key pillar to solving this crisis. To be sure, the

U.S. Rep. Elise Stefanik, R-Willsboro, said she has not yet taken a position on President Obama's plan to help Puerto Rico restructure its debt. "I'm reviewing the plan with my colleagues," Stefanik said in a telephone interview on Thursday. Stefanik said if Puerto Rico was a state instead of a territory, it would have the option of declaring bankruptcy. Earlier this year Stefanik co-sponsored legislation to make Puerto Rico a state. Stefanik has received about $18,000 in campaign contributions from residents of Puerto Rico. One contributor also contributed to E-PAC, the congresswoman's political action committee. Stefanik undecided on President Obama's Puerto Rico assistance plan

An index of Puerto Rico bond yields reached a record high this week as investors remain unsure whether they’ll be paid on Dec. 1 and lawmakers in Washington ponder extending a bankruptcy option to the cash-strapped commonwealth. Ten-year Puerto Rico general obligations yield 12.3 percent, the highest since at least January 2013 and up from 10.1 percent on Oct. 20, data compiled by Bloomberg show. That’s 10.3 percentage points more than benchmark municipal bonds with the same maturity and equivalent to a 21.8 percent taxable interest rate for the highest earners. Puerto Rico’s bondholders face mounting risks as the commonwealth veers toward default. A spokesman for Governor Alejandro Garcia Padilla said Thursday that while the commonwealth intends to meet its obligations, the government could   run out   of cash and will pay for essential services over creditors. That announcement came a week after the Obama administration   proposed   giving the commonwealth unprecedented authority to

The liquidity position of Puerto Rico's Government Development Bank (GDB) is $874.6 million as of Sept. 30, the U.S. commonwealth's financing arm said on Wednesday. The release comes after the GDB said it would present the island's creditors with more details of the financial analyses supporting its debt restructuring plan at a meeting on Tuesday. (Reporting by Edward Krudy ; Editing by Chris Reese ) Puerto Rico's government bank has $874.6 mln liquidity -GDB

Puerto Rico's Government Development Bank said it will present the island's creditors with more details of the financial analyses supporting its debt restructuring plan at a meeting on Tuesday. The U.S. commonwealth, seeking to turn around an economy buckling under $72 billion in debt and a 45 percent poverty rate, released a turnaround plan last month that would include restructuring $18 billion of debt. Creditors have resisted debt reductions, complaining about a lack of financial disclosures from the Puerto Rican government. In a statement on Tuesday morning, GDB said it would present more detail and answer bondholders' questions about its financial data, in its first public comments on the meeting first reported by Reuters last week. “Today’s meeting ... is part of our ongoing efforts to maintain a constructive dialogue with the island’s creditors surrounding the voluntary restructuring of the Commonwealth’s debt in order to achieve a sustainable path forward,”

The government bank responsible for issuing Puerto Rico's bonds said Wednesday that its liquidity has dropped below $1 billion as concerns grow it won't be able to make a large upcoming bond payment amid the U.S. territory's economic crisis. The Government Development Bank said its liquidity stood at $875 million at the end of September. The announcement came a day after the bank's president and other government officials met with advisers of Puerto Rico bondholder groups as the territory's administration seeks to restructure a $72 billion public debt that the governor has said is unpayable and needs restructuring. Investors and economists are now questioning whether the bank will be able to meet a $355 million bond payment due Dec. 1 given its dwindling funds. "It's absolutely worrisome," economist Vicente Feliciano said of the drop in liquidity. "The general fund is also treading water ... we're coming to a credit crunch." He noted tha

Lawrence H. Summers , the Charles W. Eliot university professor at Harvard, is a former t reasury  secretary and director of the National Economic Council in the White House. He is writing occasional posts, to be featured on Wonkblog, about issues of national and international economics and policymaking. Last week, the Treasury Department   announced   their recommended approach to the profound economic and financial crisis engulfing Puerto Rico. It is big, bold and broadly appropriate, and it should be the basis for prompt congressional action. How things play out from here will be an important test of whether Washington is, as some allege, controlled by financial interests. The Puerto Rican economy has declined by more than 10 percent since 2006 and employment has declined by 14 percent. Nearly 2.5 percent of the population left the island in 2014. The problems are in part structural, coming from the combination of labor costs close to the U.S. level but productivity more comparable

Puerto Rico is looking economic calamity in the face. Among its woes: $73 billion in debt, due this year, with little hope of being able to pay it; a rate of poverty greater than that of any U.S. state; and a shrinking population. The fate of Puerto Rico is important to Connecticut, which has more Puerto Ricans per capita than any other state — a population that is rapidly growing, in part because of the island's financial situation. Congress has the ability to mitigate at least some of the island's crisis. Earlier this year, U.S. Sen. Richard Blumenthal introduced legislation to allow Puerto Rican cities to declare bankruptcy to restructure their debt, just as cities on the mainland can. That seems only fair. He and other Democratic senators also put forth bills to extend the Earned Income Tax Credit and the Child Tax Credit to residents of Puerto Rico. Doing that would bring some relief. President Obama has asked Congress to allow the entire commonwealth to declare C

Puerto Rico's Government Development Bank said it will present the island's creditors with more details of the financial analyses supporting its debt restructuring plan at a meeting on Tuesday. The U.S. commonwealth, seeking to turn around an economy buckling under $72 billion in debt and a 45 percent poverty rate, released a turnaround plan last month that would include restructuring $18 billion of debt. Creditors have resisted debt reductions, complaining about a lack of financial disclosures from the Puerto Rican government. In a statement on Tuesday morning, GDB said it would present more detail and answer bondholders' questions about its financial data, in its first public comments on the meeting first reported by Reuters last week. "Today's meeting ... is part of our ongoing efforts to maintain a constructive dialogue with the island's creditors surrounding the voluntary restructuring of the Commonwealth's debt in order to a

Fernández Arrigoitia, Melissa (2015) The rise of Puerto Rico’s crisis-citizen. Open Democracy (26 Aug 2015) Opinion Piece.       Preview PDF - Published Version Download (252Kb) | Preview Published Item LSE expert's profile Debate around Puerto Rican migration and political-economic problems heralds the emergence of a new ‘crisis-citizen’, compelled to lead the way into a better future, one individual at a time. Item Type: Website (Opinion Piece) Official URL: https://www.opendemocracy.ne Additional Information: © 2015 The Author Library of Congress subject classification: H Social Sciences > HV Social pathology. Social and public welfare. Criminology Sets: Departments > Geography and Environment Research centres and groups > LSE London Centre for Urban and Metropolitan Research Date Deposited: 26 Oct 2015 11:41 URL: http://eprints.lse.ac.uk/64154/ The

Puerto Rico's top legal official urged the U.S. commonwealth's legislature on Monday to adopt a bill proposing a control board to oversee the government's finances, calling it the best way to show creditors a commitment to resolve its fiscal problems. Testifying at a joint hearing of Puerto Rico's House Judiciary and Treasury Committees, Justice Secretary Cesar Miranda said the board, which is part of a broad economic turnaround plan by Governor Alejandro Garcia Padilla, would show the island was serious about fiscal responsibility. "This measure is necessary to communicate to constituents and our creditors that Puerto Rico is committed to maintaining responsible management of its finances," Miranda said in written testimony ahead of his remarks, translated from Spanish. The board would "boost the economic development of the island while ensuring the well-being of the general citizenship," and would not infringe on the island's constitution or

Ultimately, if you continue to spend more than you take in — whether you are an individual, business or government — there will be a day of reckoning. Puerto Rico is likely to reach that day by Dec. 1. Back in June, the governor of Puerto Rico , Alejandro Garcia Padilla, announced that the government debt of $73 billion had grown so large that it was no longer “repayable.” At that time, many of us who have had experience with countries in fiscal crisis made recommendations (see my commentary “ Puerto Rico is America’s Greece,” June 23) to avoid what is now almost certain to happen. Puerto Rico is a partially self-governing U.S. possession. It is required to follow the U.S. Constitution and many, but not all, federal laws and regulations. As is its pattern, the Obama administration waited until the last minute — this past week — to unveil its “solution,” dubbed “Super Chapter 9.” Chapter 9 is a provision in the U.S. bankruptcy code that allows local governments in U.S. states, but

Puerto Rico is not a state, but it's still part of the United States, and it's in big trouble. The U.S. commonwealth is facing a financial meltdown and possibly much worse. "I can tell you with total confidence that Puerto Rico's fiscal crisis is escalating and is very real, and that without federal action it could easily become a humanitarian crisis as well," Antonio Weiss, a U.S. Treasury Secretary counselor, said at a Senate committee hearing on Thursday. Weiss said that the "economic security and well-being of 3.5 million Americans living in the commonwealth is at stake." Puerto Rico is over $72 billion in debt, and the island has a poverty rate around 45 percent. It is believed Puerto Rico will have to choose between funding essential programs or paying creditors before the year is over, unless actions are taken. Basic services like police, firefighters, and healthcare could have to shut down, according to Puerto Rico Governor Alejandro Garcia

Fearing her husband would die waiting for a heart transplant in Miami, Carmen Concepcion started looking for a faster way to save his life, and found the answer in her native Puerto Rico. Pablo, 59, could barely walk from the family room to the bathroom without growing short of breath, Carmen said. She looked across the states for hospitals with shorter wait times until a friend recommended she consider her homeland. Carmen was hesitant but "gave it a chance." In December, Pablo received his heart transplant, becoming the first person to travel from the mainland to the U.S. commonwealth for the procedure, said Dr. Ivan Gonzalez-Cancel, his surgeon and the director of the heart transplant center at the Cardiovascular Center of Puerto Rico and the Caribbean. Pablo is now able to bike about a mile and climb four to five flights of steps. Puerto Rico is trying to build its medical tourism industry, from a current level of about $80 million a year to $300 million by 2017, as p

The Obama administration on Thursday told Congress that Puerto Rico’s economic woes could quickly turn into a humanitarian crisis unless Congress adopts a blueprint for dealing with the island’s crushing $72 billion debt burden. Antonio Weiss, a Treasury Department official who is the administration’s point person on Puerto Rico, called on lawmakers to create a new territorial bankruptcy regime that would allow Puerto Rico to restructure its debt. The plan would also impose new oversight on the island’s finances, expand Medicaid benefits and allow residents to qualify for the same low-income tax credits that are offered to other American citizens through the Earned Income Tax Credit. “Puerto Rico is out of cash and running out of options,” Weiss told the Senate Energy and Natural Resources Committee, which has jurisdiction over U.S. territories such as Puerto Rico. “In the very near future, Puerto Rico will face impossible choices among providing essential public services, delivering

Puerto Rico’s debt crisis exploded into view at the end of June, when Governor Alejandro García Padilla revealed that the island’s fiscal situation was so bad it wouldn’t be able to repay the $73 billion it owed to bondholders. The unexpected statement sent Congress scrambling for a solution, and since then, the debate has centered on whether Puerto Rico’s public corporations, like utilities—which hold a significant amount of its debt — should be allowed to declare chapter 9 bankruptcy, an option available in all 50 U.S. states, but not in Puerto Rico. Both Jeb Bush and Hillary Clinton have expressed support for the idea. In July Senators Richard Blumenthal (D-Conn.) and Chuck Schumer (D-N.Y.) introduced a chapter 9 law for Puerto Rico, and the Senate Finance Committee held a contentious hearing on the island’s finances in September. This week the Obama administration weighed in with its own plan, and it’s considerably more radical. In a 10-page document issued Wednesday night,

Yields on Puerto Rico general obligation bonds climbed as much as 40 basis points to 11.84 percent on Thursday from 11.44 percent in secondary market trading on Wednesday as the financially struggling commonwealth sought help from the U.S. government. The yields rose as $56.6 million of the 2035 bonds carrying an 8 percent coupon traded at lower prices on Wednesday, according to trading data posted by the Municipal Securities Rulemaking Board. (Reporting By Karen Pierog ; Editing by Chris Reese ) Yields rise 40 bps on Puerto Rico GO bonds

President Obama is trying to rescue Puerto Rico from its debt crisis. But the White House’s lifebuoy may not make a difference in the end. Congress has to approve the plan and that appears unlikely. The Obama administration announced its support Wednesday evening for Puerto Rico’s cities to gain access to the same bankruptcy rights as cities in all 50 U.S. states — Chapter 9 bankruptcy. Puerto Rico’s governor has been begging Congress for the bankruptcy option. But even if Puerto Rico got Chapter 9 rights, it would only cover about a third of the island’s $72 billion debt. To help out with the rest, the White House also proposes a clear legal framework for U.S. territories like Puerto Rico to do debt restructurings going forward. Some are calling it “Super Chapter 9” rights. It’s the biggest support Puerto Rico has received since it defaulted on its debt in August. The island’s politicians have repeatedly said they can’t pay back all the debt and that they will soon have to chose betwe

Looking for a way to help debt-ridden Puerto Rico, administration officials on Wednesday proposed an ambitious — if politically perilous — plan that stops short of a direct federal bailout but that its backers hope is sweeping enough to keep the island from becoming America's Greece. The plan would create a new territorial bankruptcy regime and impose new fiscal oversight on Puerto Rico, which is mired in the depths of a decade-long recession, running out of cash and struggling to make payments on $72 billion of debt. It represents an urgent bid by President Obama to offer a way forward. But it requires cooperation from a Republican-led Congress bent on imposing spending restraint. In describing the package on Wednesday, administration officials emphasized that they had exhausted the limits of their own authority to help Puerto Rico, and needed quick action by Congress to avoid a catastrophe. "Administrative actions cannot solve the crisis," Jacob J. Lew , the Tre