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The governor of Puerto Rico said in a televised address Monday that the island cannot pay back more than $70 billion in debt, setting up an unprecedented financial crisis that could rock the municipal bond market and lead to higher borrowing costs for governments across the United States. “This is not about politics,” said Puerto Rico’s governor, Alejandro Garcia Padilla. “It’s about math.” “The first step is to revive economic growth...We will never get out of this vicious cycle,” said Garcia Padilla. “But we need to do more—much more—to return to riches and to become more competitive and have an...

Former Florida Gov. Jeb Bush has said that he supports Puerto Rico filing for bankruptcy in the face of the massive debt the Caribbean island is facing. When Bush visited Puerto Rico, which is a U.S. territory, on a campaign stop in April, he told a crowd that the public agencies in Puerto Rico should be able to seek bankruptcy under Chapter 9, according to the Puerto Rico Report.

Now that you’ve created the next great app and your investment in your startup is worth a billion dollars, at least on paper, it’s time for a really difficult challenge: how to cash out without paying capital gains taxes anywhere in the world? With no U.S. or Puerto Rican tax on much investment income of new residents, U.S. citizens now can pay zero tax on capital gains. For several hundred affluent Americans over the last couple of years (including Toby Neugebauer, a key financier to Ted Cruz) the answer has been to establish a principal residence in Puerto Rico, and...

Summary •Puerto Rico's borrowings represents an exceptionally complex set of credits in the (already arcane-enough) municipal bond market. •The Legislature's recent rejection of the Governor's tax reform proposal leaves fewer options to balance the budget and raises liquidity concerns. ~ snip ~ Puerto Rico released its most recent quarterly financial report on May 7. The report's list of risk factors includes the possibility of the Commonwealth running out of cash and defaulting on debt payments as soon as September. As organizations go, state and local governments are hideously illiquid. Even in the best of times, their political constituents do not...

The governor of Puerto Rico told the New York Times that the island cannot pay back it's $72 billion debt and will seek permission from its creditors to defer payments. The news precedes an address by Governor Alejandro Garcia to the Puerto Rican legislature, where he will unveil a budget that cuts about $670 million from a $9.8 billion budget, while setting aside another $1.5 billion to pay the debt. Fox News: Gov. Alejandro Garcia Padilla's spokesman, Jesus Manuel Ortiz, confirmed that the island's government is seeking to defer payments while negotiating with creditors. He confirmed comments by Garcia that appeared...

Puerto Rico's governor believes the U.S. territory will not be able to pay back its $72 billion public debt, a spokesman told the Associated Press late Sunday. Gov. Alejandro Garcia Padilla's spokesman, Jesus Manuel Ortiz, confirmed that the island's government is seeking to defer payments while negotiating with creditors. He confirmed comments by Garcia that appeared in a report in The New York Times published late Sunday, less than a day before Garcia is scheduled to deliver a public address amid debate on a $9.8 billion budget that calls for $674 million in cuts and sets aside $1.5 billion to...

Like Greece, the Puerto Rican government has more debt than it can service, and some are calling for a bailout by U.S. taxpayers. The major Puerto Rican state-owned or controlled enterprises are all losing money, including the power authority which is insolvent. Puerto Rico is an American territory that was acquired from Spain in 1898 during the Spanish-American War. The island has a population of about 3.6 million, which is declining as many Puerto Ricans emigrate to the U.S. mainland or elsewhere because of the continuing economic stagnation. Puerto Ricans are American citizens, but their per capita income is about...

Fresh off a setback on his tax reform plan, Puerto Rico's governor laid out a recovery roadmap on Thursday for the U.S. commonwealth's struggling finances. In his state of the Commonwealth address, Governor Alejandro Garcia Padilla chastised the Puerto Rico House of Representatives for rejecting tax changes critical to his financial recovery plan, saying it made recovery harder but not impossible. Padilla said he will form a group of financial experts charged with improving Puerto Rico's liquidity and another to take on a reorganization of the government. He also released an agenda that calls for spending cuts in all government...

Puerto Rico is in trouble, after years of bad policies, mismanagement, excessive debt and bad luck. Its economy has been shrinking or stagnant for a decade and the unemployment rate sits at nearly 12 percent. The commonwealth and its utilities have a debt of $73 billion, its public pension funds are woefully underfunded and one state agency has warned that the government could be forced to shut down soon because it might run out of money. Lawmakers in Washington and San Juan need to come up with a plan that addresses the financial and economic problems of the territory, which...

Puerto Rico's Government Development Bank warned Wednesday that it is very likely the U.S. territory's government could be forced to shut down in the next three months because of a lack of funds. The bank made the warning in a letter made public a day after it was sent to Gov. Alejandro Garcia Padilla and the presidents of the island's Senate and House of Representatives. "The island's financial state is extremely uncertain," the letter said. "A government shutdown would have a devastating impact on the economy, with salary and public service cuts, and a long and painful recovery."

Puerto Rico's top finance officials said the government of the US territory will most likely shut down in three months because of a looming liquidity crisis, and they warned of a devastating impact on the island's economy. In a letter to leading lawmakers, including Gov. Alejandro Padilla, the officials said a financing deal that could potentially salvage the government's finances looked unlikely to succeed. It warned of laying off government employees and reducing public services. "A government shutdown is very probable in the next three months due to the absence of liquidity to operate," the officials said. "The likelihood of...

Antonio Weiss, the former Wall Street banker who became a top adviser to the Treasury secretary this year, has made two trips to Puerto Rico in recent weeks. Kent Hiteshew, who runs the Treasury Department’s office of state and local finance, has also met with government officials in San Juan multiple times this spring. The Treasury Department is quietly stepping up its involvement in Puerto Rico, indicating that the island’s financial problems, which have been simmering for years, are reaching a critical point. High-ranking officials have been shuttling between Washington and Puerto Rico, advising commonwealth officials as they try to...

95 percent of Puerto Ricans speak SpanishThe Social Security Administration (SSA) approved disability benefits for hundreds of Puerto Ricans because they do not speak English, despite the fact that Puerto Rico is a predominantly Spanish-speaking territory.According to a new audit by the Office of Inspector General (OIG), the agency is misapplying rules that are intended to provide financial assistance to individuals who are illiterate or cannot speak English in the United States. Under the rules, Puerto Ricans are allowed to receive disability benefits for their inability to speak English as well.“We found the Agency did not make exceptions regarding the...

The governor of Puerto Rico has admitted that it can't keep paying down the over $72 billion worth of public debt obligations. As a result, it finds itself in a uniquely awful position. It can't go into bankruptcy according to its own laws, so now it has to deal exclusively with its creditors to restructure its debt. That means it has to deal with Wall Street. "I think the surprise was that it happened this quickly," said Brian Kelly, CEO of Connecticut-based fund Brian Kelly Capital. "We thought it would take 6 months to a year... the solution is a...