It is estimated that Puerto Rico has already lost roughly 2 per cent of its population in 2014 alone. There was an average of 230 people leaving every day that year and people still continue to leave. Puerto Rico is billions of dollars in debt and they don't have enough to pay off their interest payment and also fund their essential services. They recently decided to go with funding their essential services and moving to default on their $422 million dollar debt payment. And they owe another $1.9 billion coming up again in July.
For now creditors, who refer to themselves as the Ad Hoc Group, have agreed to 30 days of talks and to hold off on legal action over the matter. The group is made up of a number of hedge funds. Any restructuring of their debt will have to first be approved by US congress. “Our worst enemy at the moment is politics,” said Garcia Padilla on the matter. Padilla is the current Governor of the Commonwealth of Puerto Rico after he took the position back in early 2013. Despite Ad Hoc Group agreeing to a delay in legal action on the matter however, it is also possible that Puerto Rico could still face legal action from creditors who are not part of the Ad Hoc Group.
“The United States played a big part in aiding Puerto Rico in borrowing all this money,” says financial expert Peter Schiff who happens to reside in Puerto Rico.
Puerto Rico has been struggling with its economic recession for roughly 10 years now and so far thousands of teachers have left, a large majority of the students have too, and many others continue to leave for better options elsewhere as well. Puerto Rico took on billions of dollars in loans by issuing bonds to investors and they won't have the option to declare bankruptcy; they'll have to resolve the issue in court with creditors. The unemployment rate is allegedly currently sitting at around 12.2 per cent. The number of homeless in the area also continues to rise and it is estimated that almost half of the island's population lives in poverty.
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