A US federal judge approves the Puerto Rico public debt restructuring plan

Aerial view of Laguna del Condado in San Juan, the capital of Puerto Rico. Laurie Chamberlain (Getty Images)

Puerto Rico is about to close a period of fiscal and financial uncertainty after approving the US justice system to restructure its public debt worth 33,000 million dollars.

The Commonwealth filed for bankruptcy almost five years ago, being the first in the United States to take this step.

The sanctioned this Tuesday is the largest public debt restructuring agreement in the country's history.

The island's authorities presented last October the so-called Debt Adjustment Plan (PAD), which contemplates reducing the public debt from 70,000 million to 34,000 million dollars to preserve essential public services. This Tuesday Laura Taylor Swain, the federal judge in charge of applying the bankruptcy law, has given her approval to the plan.

For the island's authorities, the confirmation of the PAD represents "a great step for economic recovery."

The manager who has supervised the territory's finances since 2016 has welcomed the news on her Twitter account, calling it a "new chapter in the history" of the island.

“The Puerto Rico Financial Management and Oversight Board is indebted to Judge Swain for her tireless leadership, her exemplary diligence, and her dedication to [achieving] a fair solution to the crisis in Puerto Rico,” explains the manager in a thread from Twitter.

"We still have a lot of work ahead of us," said Pedro R. Pierluisi, governor of the island.

"The agreement, although not perfect, is very good for Puerto Rico because it protects our pensioners, the university and the municipalities that are at the service of our people."

The management board, created by Congress, does not enjoy sympathy among the island's population of just over three million inhabitants, many of whom refer to it as "the board." Those most critical of the restructuring also fear that the territory lacks sufficient liquidity and will be unable to meet even reduced long-term debt payments, in which case it will be forced to adopt stricter austerity measures that would fuel dissatisfaction. of the population.

To the bankruptcy declaration, almost five years ago, have been added the ravages of several hurricanes, a series of earthquakes and the coronavirus pandemic, factors that have aggravated the economic crisis and social unrest. According to the terms reflected in the PAD, the restructuring involves reducing most of the public debt, some 33,000 million dollars, by approximately 80%. The plan will also save the government more than $50 billion in debt service payments.

When Puerto Rico filed for bankruptcy in May 2017, the public debt rose to more than $70 billion in bonds and more than $50 billion in unfunded pension obligations for public workers.

The bankruptcies of other public entities, such as the island's electricity company, are still pending resolution.

The Puerto Rican is not the first US administration to suspend payments.

In 2013, Detroit, the once-thriving mecca of the auto industry, became the first US city to file for bankruptcy.

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