The governor of Puerto Rico has expanded an emergency debt moratorium on some notes issued by the U.S. territory’s infrastructure financing authority.
Alejandro Garcia Padilla made the decision late Friday, saying it was necessary to protect the government’s ability to provide essential services at a time when the economic outlook is worsening. The move was needed, he said, to “ensure the public health, safety, education and well-being” of Puerto Rico's residents.
Padilla enacted a moratorium on other financing authority debt in April and has declared fiscal emergencies at the Government Development Bank and Puerto Rico Highway and Transportation Authority.
Earlier this month, the U.S. House of Representatives passed legislation creating a board to oversee a restructuring of the island's debt, giving way to suspension of any past or future lawsuits related to the nonpayment of some of Puerto Rico’s debts.
The U.S. Senate is expected to vote on the measure before Puerto Rico is scheduled to make July 1 debt payments of nearly $2 billion. President Barack Obama’s administration has backed the measure as a compromise.
During a forum in Washington earlier in the week, Padilla repeated that Puerto Rico does not have the money to cover the bond payments that come due on July 1 and would have to default.
Puerto Rico, with 3.5 million U.S. citizens and a 45 percent poverty rate, has $70 billion worth of debt that it says it cannot repay in full.
Padilla urged the Senate on Friday to approve the pending legislation related to the restructuring of Puerto Rico's debt.