FOR IMMEDIATE RELEASE
Contact: Carolina Gonzalez, firstname.lastname@example.org, 929-287-4263
SOME OF PUERTO RICO’S $72B PUBLIC DEBT MAY VIOLATE PR LAWS & CONSTITUTION, ACCORDING TO PRELIMINARY REPORT
Puerto Rico Debt Audit Commission Survey Report Could Affect House Bill to Restructure Public Debt
New York – Members of VAMOS4PR, a network of stateside organizations and individuals taking a stand for a fair economy for all Puerto Ricans, released today at the offices of LatinoJustice PRLDEF in downtown Manhattan the preliminary results of a report by Puerto Rico’s Independent Debt Audit Commission, which is preparing a complete audit of the island’s $72 billion public debt. The report was released this morning by the Commission, appointed by Puerto Rico’s legislature, in San Juan, Puerto Rico, and it highlights how several portions of the public debt may have been incurred in violation of Puerto Rico’s laws and constitution.
The report highlights several ways that the Commonwealth government may have violated its laws and constitution, including:
Failing to main a balanced budget and instead borrowing over $30 billion over the past 37 years to cover deficits;
Spending as much as 25% of internal revenues on debt, which could violate the constitutional prohibition on spending more than 15% of internal revenues on debt;
Refinancing debt with more loans instead of paying the original debt, over a period that may violate the constitutional provision that prohibits Puerto Rico from issuing any loan for more than 30 years;
That Puerto Rico’s debt to GDP ratio of 96% has created “unproductive debt” that has strangled much needed growth of the island economy.
The Commission will investigate these issues further as part of its work. If an independent process finds unconstitutional practices occurred, a significant portion of Puerto Rico’s $72 billion debt might not have to be paid back.
“While the Commission still has a great deal of work to do on these and other questions, the strong possibility that nearly half of the current debt could be declared unpayable would be a big help to Puerto Rico’s families, who are struggling under massive cuts to education, health care and jobs through no fault of their own,” said SEIU 32BJ President Héctor Figueroa. “This possibility would bring down the scope of relief Puerto Rico needs to a more manageable level. Current proposals to address Puerto Rico’s debt should not continue to head down a path that will satisfy bondholders while pushing millions of Puerto Ricans and their families to the breaking point.”
VAMOS4PR believe that the Committee’s determination could affect proposals to restructure the public debt, including the current PROMESA bill, approved last week by the House Natural Resources Committee and headed for a full House vote within the next few weeks. VAMOS4PR opposed this Congressional legislation because it contains several measures that protect the interests of bondholders over those of Puerto Rican working people. Our VAMOS4PR network believes that this survey report will help to make the case that the federal government should not rush into legislation that could lock the island into a devastating repayment plan.
“We continue to be extremely concerned at the language of the PROMESA bill in Congress that attaches any possibility for debt restructuring for Puerto Rico with the imposition of a federal control board, that would have the power to establish fiscal priorities, insist on the imposition of more austerity measures, prioritize payment to creditors and undermine any semblance of democracy,” said LatinoJustice PRLDEF Associate Counsel Natasha Lycia Ora Bannan. “A public auditing of the debt is necessary for the citizens of Puerto Rico to understand what they are being asked to pay for and to ensure transparency and accountability of public funds.”
VAMOS4PR believes that a complete audit of the debt will provide an essential baseline to developing measures that can best address the island’s immediate humanitarian crisis and its long-term economic health. A complete audit of the debt is part of the baseline principles of VAMOS4PR’s work, which includes seeking to secure a restructure of Puerto Rico’s public debt, protecting and expanding workers’ rights in the island, advancing development proposals that sustain its economy in the long term, and educating and mobilizing the Puerto Rican diaspora and its allies.
An executive summary of the report is available upon request.
VAMOS4PR is a group of labor, community, cultural and human rights organizations and individuals who live and work stateside and support a fair economic future for Puerto Rico.