PUERTO RICO
FACES DEFAULTS AS CONGRESS STALLS ON WAY TO HELP. BY NEW DELHI TIMES BUREAU
USA, April 15, 2016. Puerto
Rico is facing a deadline for a multimillion-dollar bond payment next month as
House Republicans struggle to find a way to help the island deal with its $70
billion debt.
A House committee
canceled a Thursday vote on the issue as Republicans were divided on how
Congress should weigh in. Gov. Alejandro Garcia Padilla has warned that a debt
restructuring measure needs to be approved soon as the deadline for a $422
million bond payment looms in May.
Puerto Rico has said
it will likely default on the payment, which would mark the first time the
island would default on general obligation bonds protected by the island's
constitution.
Obama administration
officials warned at a hearing Wednesday that the island is facing total
financial collapse if Congress doesn't step in. Republicans agree on the
urgency of the matter, but they have faced opposition from within their own
caucus and from Democrats.
Legislation released
by the panel this week would create a control board and allow the board to
facilitate some court-ordered debt restructuring, though it does not give the
island the broad bankruptcy authority that territorial officials had sought.
Democrats worried that
the control board would be too powerful, prompting echoes of colonialism.
Some conservative
Republicans had objected to the debt restructuring, saying it's a bad
precedent. In an attempt to satisfy those lawmakers, the most recent draft of the
bill would give creditors more of a say on debt plans, allowing them a
preliminary vote on whether they wanted to voluntarily restructure debt.
But it was not enough.
At Wednesday's hearing, several Republicans on the panel expressed reservations
about the restructuring. Joining them was Treasury Department official Antonio
Weiss, who said the Obama administration is concerned that allowing creditors
to vote on debt restructuring could delay the process.
House Speaker Paul
Ryan, R-Wis., endorsed the legislation and encouraged his colleagues to sign
on.
"Congress has a
constitutional and financial responsibility to bring order to the chaos that is
unfolding in the U.S. territory — chaos that could soon wreak havoc on the
American bond market," Ryan said.
Puerto Rico has been
mired in economic stagnation for a decade. The financial problems worsened as a
result of setbacks in the wider U.S. economy, and government spending in Puerto
Rico continued unchecked as borrowing covered increasing deficits.
Credit : AP and Photo Credit : AP Photo.
New Delhi Times Bureau | April 15, 2016 at 3:30 am |
Categories: Latest Stories, World | URL:http://wp.me/p2xBeF-ooO
