The governor of Puerto Rico says the island is defaulting on a $422 million debt payment due Monday, and he says the U.S. is partly to blame.
Garcia Padilla said in a televised speech Sunday to the island's 3.5 million residents that he has made the "painful decision" to not pay the island's creditors, but will instead fund public sector salaries and health and education budgets to avoid a "humanitarian crisis."
"I have decided that your basic needs are more important than anything else," the governor said.
Padilla said he did not want a bailout and had sought to restructure the existing debt. The U.S. territory, however, needs U.S. Congress to pass a restructuring bill for the island, but partisan politics have bogged down any movement on that measure.
"We would have preferred to have had a legal framework to restructure our debts in an orderly manner," Padilla said. "We have asked the U.S. Congress time and time again to give us the tools to restructure our debts."
Puerto Rico has defaulted on payments before, but Monday's default is the largest and includes debt held by Wall Street bondholders and hedge funds.
Economic analysts say the U.S. territory is basically bankrupt with a total debt of about $70 billion.