Congress Restructures Puerto Rico’s Debt But Defaults Still Loom

Gretchen Sierra-Zorita, public policy and advocacy specialist and member of the National Puerto Rican Agenda, an organization working on the Puerto Rico fiscal crisis, discusses the congress-approved rescue package that allows Puerto Rico’s government to restructure its $72 billion debt, but will not prevent the island from defaulting on upcoming payments. Supporters of the bill say it will protect the island from being sued by hedge funds and other creditors and ensure that financial resources are used for the most important services, such as public pensions and public utilities, including transportation and sanitation. 

Sierra-Zorita said the bill is somewhat of a mixed bag in terms of its receptions from those who have a stake in Puerto Rico.

"It has things that everybody likes and everybody dislikes," she said. "For the 18 creditors involved with Puerto Rico's $70 billion debt, they would not like the restructuring aspect of this bill, however I'm sure they're very happy with the very powerful control board that will try to insure financial responsibility in Puerto Rico. From Puerto Rico's perspective, it's a completely different situation. PROMESA allows us to restructure out debt in a very comprehensive way and this is a very important first step in economic recovery."