Puerto Rico's government continues to cut public services as the economic crisis worsens. The Government Development Bank announced this week that the island's budget gap is $2 billion higher than expected. The prison system in Puerto Rico can no longer pay a vendor that feeds inmates. Some special education teachers are no longer being paid.
In recent years, 200 schools have closed. The island's only children's hospital, which doesn't own an MRI machine, cut its budget by 14% in last two years. Pension funds that the government used to pay the debt are expected ‎to run out of money by 2020.
"The situation is getting worse in Puerto Rico," stated Eric LeCompte, Executive Director of the religious development group Jubilee USA. LeCompte advises Puerto Rico's religious leaders and just returned from San Juan meetings with the island's Governor and US Treasury Secretary Jacob Lew to discuss solutions to the crisis. "Puerto Rico's debt crisis has real immediate human costs."
On an island where nearly 1 out of 2 people lives in poverty, Secretary Lew called again on Congress to grant Puerto Rico access to bankruptcy protection. The island has $72 billion in total debt but is excluded from Chapter 9 of the US bankruptcy code that would allow its municipalities and public utilities to file for bankruptcy. The Government Development Bank projects Puerto Rico's budget gap at nearly $24 billion over the next decade.
The US House of Representatives is considering two bills to grant Puerto Rico bankruptcy access. The House Committee on Natural Resources will hold its second hearing on Puerto Rico on January 26 to debate aspects of those bills. Speaker Paul Ryan promises the House will act by March 31.
"There won't be economic growth in Puerto Rico until the debt crisis is resolved," noted LeCompte.