Alejandro Garcia Padilla is the governor of Puerto Rico.Last month, he said the territory could not pay its $72billion public debt. This amount includes money owedby the central government, cities and publicly-ownedbusinesses, like power companies.
 |
| A woman walks in front of a closed bank in the neighborhood of Rio Piedras in San Juan, Puerto Rico, June 29, 2015. |
Puerto Ricois the third-largest issuer of state and local debt in the UnitedStates. Only California and New York have more debt.
Much of the island’s debt is held by individual American investors. They gotpossession of it through ownership of shares in mutual funds and otherinvestments.
Some observers say the U.S. economy could be hurt if Puerto Rico is not ableto pay its debts. They believe the island may be unable to make its requireddebt payments. If that happens, investors could ask a court to force theterritory to make the payments.
Puerto Rico’s debt problem has not received as much attention as theeconomic crisis in Greece. That is partly because the territory’s problems are not new. Puerto Rico has been in an economic recession since 2005. That was when the U.S. Congress made changes to a tax program that had givenbusinesses financial aid for moving to the island. In the years since theprogram was changed, the territory has had to borrow money to pay its debts.
Pedro Pierluisi serves as Puerto Rico’s Resident Commissioner in the U.S.House of Representatives. He wrote about the economic problems last weekin The New York Times newspaper. He said that, on the island, “theunemployment rate, poverty rate and median household income have alwaysbeen far worse than any state’s. The main cause is inequality.”
He also said Puerto Rico does not have much power in Congress because it is only a territory. Although Puerto Ricans are U.S. citizens, they do not havethe right to vote in presidential elections or elect someone to the Senate. Theterritory sends a delegate to the House, but she or he cannot vote onlegislation, except during committee meetings.
Mr. Pierluisi has proposed legislation that would permit Puerto Rico to declarebankruptcy. American cities can ask for a court’s approval to cancel debts, but territories cannot.
I'm Christopher Jones-Cruise.
VOA Economics Correspondent Molly McKitterick reported this story.Christopher Jones-Cruise adapted it for Learning English. George Grow was the editor.
______________________________________________________________
Words in This Story
issuer– n. someone or something that develops, registers and sells financialinstruments for the purpose of financing its operations
mutual fund – n. an investment program that trades in shares of stock orother investments
bankruptcy– n. a legal term for being unable to repay debts to creditors
