US to Help Puerto Rico Restructure Its $70 Billion Debt

MOSCOW, August 5 (RIA Novosti) - US Treasury Department will assist Puerto Rico Commonwealth in tackling its fiscal challenges with comprehensive strategy, including tax system overhaul, Bloomberg reported.

“Although Puerto Rico has additional difficult choices ahead, we recognize the importance of the Commonwealth’s ongoing efforts to achieve fiscal stability and economic growth,” Bloomberg quoted Treasury State and Local Finance Office director Kent Hiteshew as saying.

Puerto Rico and its agencies, including the Electric Power Authority and the Highways & Transportation Authority, have borrowed millions over the years to try balancing budgets. As a result, the island’s debt load has reached $70 billion. The Commonwealth is now expected to start restructuring some of its borrowings.

“The Treasury Department remains in close contact with Commonwealth officials as we continue to monitor their progress,” Hiteshew said.

Puerto Rico is the third-largest municipal debtor in the United States, behind California and New York.

Puerto Rico economy has been shrinking at a 6 percent annual pace, with 68 percent of the island’s inhabitants unemployed.

Its economy is mainly driven by manufacturing, followed by the service industry.

Poor English skills of Puerto Ricans are seen as the main impediment to relocating the US service businesses to Puerto Rico.

Forty-one percent of Puerto Rico population lives below the poverty line, which makes it even poorer than the poorest US state of Mississippi.

The Commonwealth of Puerto Rico is an unincorporated territory of the United States, located in the northeastern Caribbean Sea. Although part of the United States, the official Commonwealth's language is Spanish and about 85 percent of inhabitants do not speak English at all.

US to Help Puerto Rico Restructure Its $70 Billion Debt