The Need for the Establishment of a Puerto Rico Financial Stability and Economic Growth Authority

The Commonwealth of Puerto Rico finds itself in dire economic circumstances. As of the end of 2015, it had over $70 billion of debt – excluding pension obligations, which exceed $40 billion. The debt is expected to grow by another $27 billion over the next 5 years. Puerto Rico's fiscal situation was further compromised on January 4, 2016 when Puerto Rico defaulted on $174 million owed to holders of municipal debt in order to cover higher-priority general obligation debt payments. The new reality for Puerto Rico is that credit agencies view its economic health on par, if not worse, than Venezuela's. Credit rating service Standard & Poor's (S&P) downgraded Puerto Rico to CCC-, a rating that is indicative of a substantial risk of default. The Puerto Rico legislature has had the opportunity to enact a number of financial and structural reforms that would assist in alleviating the growing debt crisis. However, as demonstrated by the legislature's failure to pass a deal that would restructure Puerto Rico's public utility's debt, such legislative action is in serious doubt. Any United States involvement in Puerto Rico's crisis must specifically address Puerto Rico's creditworthiness, the lack of labor participation and employment on the island, and the myriad of regulatory and infrastructure barriers that hinder renewed business development.