SAN JUAN, Puerto Rico—After months of pleading from Puerto Rico’s government, the U.S. Congress has agreed to help the territory restructure its massive public debt. But it comes at a steep cost: a degree of lost sovereignty with the imposition of a fiscal control board as well as a potential lower minimum wage for young workers on the island.
Those provisions in the bipartisan measure are aimed at staving off a chaotic wave of defaults on the island’s $70 billion public debt. But they stoked some anger Thursday in Puerto Rico, where people have endured a decade of a steadily worsening economy and many resent the uneven relationship with the U.S. mainland.
Yet the deal brought relief to others, who feel it could help Puerto Ricans rebuild the economy while providing sorely needed control over their government.
“This should have been done a long time ago,” said Jose Jeaudoin, a restaurant manager. “It’s been proven for many years that Puerto Rico does not know how to run itself. Any time the government takes control over something, it doesn’t work or it goes broke.”
The bill calls for the creation of a seven-member control board appointed by Congress and the president that would oversee some court-ordered debt restructurings. It would also require Puerto Rico’s government to submit budgets and create a plan to achieve fiscal responsibility and eventual access to financial markets. The board also would be responsible for maintaining the legal rights of creditors and shoring up pension shortfalls for an island whose public pension obligations are underfunded by more than $40 billion.
U.S. law blocks Puerto Rico’s public agencies and municipalities from declaring bankruptcy and restructuring debt under a judge’s supervision.
