Report: Puerto Rico is bankrupt, with actual debt that's twice the official figure

In an unusual step, Puerto Rico's leading media group openly declared on Tuesday, calling for the restructuring of a public debt that it says is really twice the official figure.

"Puerto Rico is broke" is the eloquent front-page headline Tuesday of El Nuevo Dia, the daily with the most readers in the U.S. commonwealth and which dedicates a 20-page special to proving that the Caribbean island's accumulated debt is double the generally accepted figure of $73 billion.

The article talks about a $167.46 billion debt, a "frightening" figure obtained by adding up interest on the debt and the deficit accumulated by retirement and public health programs.

"You don't need to be an economist from Harvard to understand that this debt is unsustainable," says the editorial entitled "Restructuring, there's no other choice," and which bluntly states that "Puerto Rico's viability as a country is at stake."

This move by the Ferre Rangel Group was being described Tuesday as historic, because up to now few have dared to voice such a warning, and yet the alarm is being sounded by a conglomerate that besides controlling three of the five biggest newspapers on the island, has many other enterprises.

"Since the beginning of the century at least 20 sovereign nations have defaulted or renegotiated their government debts. Some preventively and others after defaulting," the editorial says.

The editor of the daily, Luis Alberto Ferre Rangel, says the intention is to "focus public debate" on "recapitalizing" the Government Development Bank, restructuring the debt, redimensioning government and carrying out a genuine tax reform."

Without singling out either of the two parties that dominate Puerto Rican politics, it sums up very clearly the causes that have led to this complicated economic situation, with simple infographics that go back to the 1980s.

At that time, it says, "the government began to borrow funds in order to pay its debts when faced with a reduction of tax revenues caused, among other factors, by the economic crisis set off by the oil embargo of the mid-1970s and the recession from the mid-1980s to the beginning of the 1990s."

"Over the past 15 years, the government has operated under a constant deficit. Poor administration and wrong decisions paved the way to a historic public debt that now has the country almost totally bankrupt," the paper says.

For that reason, "it is now an urgent matter to explore and establish the government's options for getting the country out of this profound crisis," which is only getting worse, the daily said, because of the exodus of Puerto Ricans to the U.S. mainland.

Fewer than 1 million of Puerto Rico's 3.5 million residents have steady jobs, food costs have gone up almost 50 percent over the last 10 years, pension systems have accumulated $34 billion in unfunded liabilities and the total owed to bondholders comes to $47,800 per inhabitant.

Report: Puerto Rico is bankrupt, with actual debt that's twice the official figure