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Puerto Rico Calls On Congress For Help In Billion Dollar Debt Crisis

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Puerto Rico Calls On Congress For Help In Billion Dollar Debt Crisis

Latin America

Puerto Rico Calls On Congress For Help In Billion Dollar Debt Crisis

Puerto Rico Calls On Congress For Help In Billion Dollar Debt Crisis

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Puerto Rico has a billion dollars in debt payments due January 1 and the U.S. territory's governor says the island may default. If forced to choose between making debt payments or paying for vital public services, Gov. Alejandro Garcia Padilla says he will choose Puerto Ricans. The heightening crisis has spurred Congress to take action, but it might not come until the island is insolvent.

AUDIE CORNISH, HOST:

It may not be such a happy new year for Puerto Rico. It's struggling with more than say $72 billion of debt. The next payment is due January 4, more than three-quarters of a $1 billion. And today, Puerto Rico's governor said the island would default on part of that debt. Once again, he's calling on Washington for help. NPR's Greg Allen reports.

GREG ALLEN, BYLINE: Puerto Rico's governor Alejandro Garcia Padilla has taken on another role over the past year. He's become the island's official bearer of bad tidings, taking the grim news to Washington and to Wall Street that the U.S. territory can't pay its debts. Today at a news conference in San Juan, he said January 4 is an important deadline for Puerto Rico.

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ALEJANDRO GARCIA PADILLA: (Speaking Spanish).

ALLEN: Garcia said Puerto Rico would pay most of the $750 million in debt payments due Monday, about half of that amount the holders of general obligation bonds. Under Puerto Rico's Constitution, general obligation bonds are guaranteed repayment before all other government expenses. But the governor said Puerto Rico will default on more than $37 million in payments due on bonds issued by two government agencies. Puerto Rico has defaulted on bond payments before, but this latest default ratchets up the crisis.

Under a law passed last month, the governor has ceased or clawed back revenues from other government agencies to make payments due on the general obligation bonds. Garcia says that means the agencies have now gone into technical default. Investors who hold the agency bonds are expected to go to court. Garcia said litigation will be costly and time-consuming. But he's hoping Puerto Rico's fiscal mess will be unraveled, not in the courts, but by Congress.

(SOUNDBITE OF ARCHIVED RECORDING)

GARCIA PADILLA: (Speaking Spanish).

ALLEN: Garcia said House Speaker Paul Ryan has promised Congress will deal with Puerto Rico's fiscal crisis by the end of March. Republicans have introduced bills in the House and Senate that could extend Chapter 9 bankruptcy to Puerto Rico and set up a federally-appointed control board to oversee the island's finances.

In Puerto Rico, the governor said public employees' salaries will be paid, and no layoffs are planned. Greg Allen, NPR News, Miami.

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