Puerto Rico Running Out of Money by End of This Month
Could there be a Puerto Rico government shutdown?
Puerto Rico’s financial crisis has gravely worsened after Hurricane Maria. Its Secretary of Treasury is now warning that America’s commonwealth state is on the verge of a government shutdown.
Treasury Secretary of Puerto Rico, Raul Maldonado, has revealed that the island is left with just enough money to last it until October 31, 2017, after which the government will have no choice but to halt its operations.
Puerto Rico had already filed for bankruptcy with a U.S. bankruptcy court earlier this year, and it is struggling to pay for more than $70.0 billion in unpaid bills.
The island’s financial situation has gotten even worse after Hurricane Maria, as it faces an additional burden to pay for aid, rehabilitation, and recovery expenses.
The government of Puerto Rico is struggling to pay for the necessary recovery efforts in the midst of a humanitarian crisis caused by Hurricane Maria earlier this month. The hurricane, which left the island completely devastated, was the worst its residents had seen in a century.
Meanwhile, cash is short in supply, as Puerto Rico’s economy virtually turned cash-based after it lost electricity across the island during the hurricane.
Government officials have already warned that the island will not be generating any revenue in the next couple of months as business activity remains disrupted. Meanwhile, expenditures are continuing to pile up.
Trump Administration Bailing Out Puerto Rico…or Not
The island is now looking to Washington for help. Puerto Rico’s Treasury Secretary is seeking between $6.0 billion and $8.0 billion in aid from the U.S. government to keep the commonwealth government running for the next few months.
However, the response from the U.S. government has so far been underwhelming. President Trump, after visiting the commonwealth island, said he would be considering bailing out the island.
In an interview, the president was heard saying, “They owe a lot of money to your friends on Wall Street. We’re going to have to wipe that out.”
However, the Trump administration backpedaled on that stance after Trump’s budget officer Mick Mulvaney clarified that the government would not be paying off Puerto Rico’s bondholders to relieve its government. Instead, Puerto Rico will have to go through the ongoing bankruptcy proceedings. Mulvaney said, “We are not going to bail them out. We are not going to pay off those debts.”
The people of Puerto Rico are now hoping that help from the U.S. will come sooner than later. Otherwise, their government will shut down by November 1.
“Puerto Rico Is Running Out of Money,” Bloomberg, October 4, 2017.
“Trump said he wants to bail out Puerto Rico. His budget head says he didn’t mean it,” Chicago Tribune, October 5, 2017.