Post Hurricane Maria, there is no capacity for Puerto Rico to make any debt payments in the coming decade, and the entire debt stock will need to be massively written-down to make the island’s recovery feasible, according to a commentary in the Washington Post. Before the hurricanes hit Puerto Rico, the situation was already dire. The island was suffering the consequences of a decade-long recession and the largest wave of outmigration since the 1950s. The governor declared the $74 billion debt unpayable, and the public pension fund, with about $50 billion in obligations, reached a zero-funding level, unprecedented in the United States. The governor and the island’s oversight board — which Congress put in place in 2016 to deal with the island’s fiscal situation — recognized the dire circumstances and initiated a form of court-supervised bankruptcy last May. Hurricane Maria simply leaves no doubt that Puerto Rico’s fiscal plan has to be rethought, according to the commentary. Revenue will be far lower than expected, and, thus far, the federal response has provided inadequate funding for recovery and reconstruction.
