Puerto Rican Debt Troubles Continue to Worsen

Morayma ReyesFor many Americans, Puerto Rico is viewed as a sunny vacation spot right in our back yard, but not many are aware of the economical struggles PR has been facing the past decade. Puerto Rico’ labor and unemployment rates are almost double that of the mainland US. These troubling conditions force almost 10,000 Puerto Ricans to leave their homes and head for the mainland in search of work and stability.

Compared to the rest of the Caribbean nations, PR has some of the lowest fixed investment rates and they continue to show little improvement in the future. The situation remains unstable as many foreign venture capitalist firms are withdrawing and even cashing out of their investments in PR. These trends negatively affect financial operations within the country, and will only damage future economic stability. In addition to declining foreign investments and demoralizing unemployment rates, public debt is also on the rise. A recent study found that nearly 15 percent of the Puerto Rican budget is dedicated to paying the country’s steadily rising debt, leaving little room for development opportunities.

After the introduction a law aiming at restructuring of the country’s debt, current traders and bond recipients are growing nervous at the possibility that the billions of dollars acquired by PR and the public masses might not be paid. This new law signed by governor Garcia Padilla allows pubic  businesses and corporations such as the Puerto Rico Electric Power Authority (PREPA) to default and restructure their their debt budgets without a penalty. In turn, this law hurts venture capitalists who have invested billions of dollars in PR, as well as the government’s future ability to participate in the bond market trading.

In April 2014, governor Garcia Padilla addressed the public with a new legislature that reflected a billion dollar cut in public spending and other economic actions. Along with these domestic changes, the Puerto Rican government is also working closely with US bail out agencies and experts in order to guide them through this difficult time and find possible solutions.

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