Updated 01:11 AM EDT, Sat, Sep 25, 2021

Puerto Rico Debt Crisis: Governor Approves Bill Allowing the U.S. Territory Access to Bankruptcy

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The governor of Puerto Rico has signed five bills into law that seeks to help reverse the U.S. territory's economic crisis. The governor prepared for a last-minute attempt to grant Puerto Rico access to bankruptcy.

In a report with The Huffington Post, Gov. Alejandro Garcia Padilla announced that congress would decide on Friday whether or not to grant Puerto Rico's agencies access to Chapter 9 bankruptcy provisions.

"We are showing the world that we are serious about our plan," Padilla said. "I don't have words that allow me to illustrate the seriousness of the situation."

The U.S. territory is in a current economic slump that has spanned nearly a decade. The Puerto Rican government is already struggling to pay $72 billion of public debt. Garcia added that almost all of this debt is unpayable and is in need of restructuring.

Puerto Rico found a temporary reprieve on Friday, when the Supreme Court said that it would grant an appeal on a ruling that prevented Puerto Rico from granting municipalities the power to declare bankruptcy.

Garcia added that he and others are working on a plan that was proposed by the Obama administration, that would be centered on creating a territorial bankruptcy regime that would allow the U.S. territory to restructure its debt. The restructuring scheme would also help the territory with finances, maximize Medicaid benefits, and allow Puerto Rico residents to qualify for the same low-income tax benefits that are offered to other Americans by way of the Earned Income Tax Credit.

"Both the governor and the legislature are aware of the urgency and importance of this measure," said Javier Quintana, who is the director of the Electric Power Authority. The company has accumulated almost $9 billion in debt. 

Puerto Rico's economy has suffered lately because of this. Many residents are now fearing for their economic futures on the island and are now fleeing to the mainland in search for better lives. The population in Puerto Rico continues to drop, to a 15-year low of 3.5 million, according to a recent national census. 

Puerto Rico's economy is fast shrinking, and so has the local government. The United States territory's policies have already included tax and energy price hikes, school closures, cuts in pension and even the privatization of its airport. The Puerto Rican government has already laid off 21 percent of its employees since 2008. 

Puerto Rico's bankruptcy debate has been pushed back to call for a special session for debating another bill that is expected to launch the island's debt restructuring.

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