Ever since the 2008 financial crisis hit the world there have been a number of casualties, and even after seven years the world is still reeking under the burden of it as another one bites the dust and this is even more prominent as it is the backyard of the very country where the financial crisis originated the very country which is still the super power of the world the richest economy USA. Puerto Rico Governor Alejandro Garcia Padilla announced on Monday announced that the government will not make nearly $370 million in bond payments due after a failure to restructure or find a political solution. Puerto Rico is a U.S. territory’s and has a spiraling public debt crisis.
Puerto Rico once was a hub for pharmaceutical and medical equipment manufacturing, but as the economic crisis hit the tax cuts that were on offer were phased out and in order to finance the budget the Puerto Rico Government took out heavy loans only to get caught in a debt spiral and with economic recovery still not in the foresight it has become even more difficult for them to finance the debt and pay out the interests. The situation has become so bad that the Puerto Rico’s has decided to cut back on the basic services on offer like public schools and hospitals. An island with a population of 3.5 million people seems to have lost out on a future and many of them fleeing to the mainland to survive the Economic onslaught.
The only hope that could save Puerto Rico is the US congress which could waver its debt or provide a restructuring package but things have not progressed in this direction and the Congress for failing to pass a bill that would create a control board to help manage the island’s $70 billion debt and to oversee some debt restructuring. But it has been held up by “internal partisan and ideological divisions” in the House of Representatives. The Congress needs to act fast as Puerto Rico is approaching another payment day on July 1 with the due amount in the tune of over a billion dollar. The world is keeping its eyes fixed as if US cannot save its own territory the rest of the doesn’t stand much of a chance.