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Hanging on the Cliff’: Puerto Rico to Default on $422 Million Debt Payment

Puerto Rico's Financial Crisis Could Impact Growing Zika Fight 1:49

SAN JUAN, Puerto Rico — Crushed by rampant joblessness and poverty and hemorrhaging educated residents, Puerto Rico will default on $422 million in debt payments due Monday, Gov. Alejandro García Padilla said Sunday.

And things could get even worse in a couple of months, when another payment of more than $700 million is due in July, Treasury Secretary Juan Zaragoza warned.

García said in a televised address that the failure of negotiations to reach a last-minute deal to avoid a third default forced his hand.

Puerto Rico Prepares for Default on a Big Debt Payment 2:38

"The decision not to pay has been a very difficult one, and one that frankly I would rather not take," García said. But "faced with the lack of liquidity to meet both the needs of our creditors and to provide services to our people, I had to choose. And I chose."

Image: Protest in San Juan, Puerto Rico
Puerto Ricans march Sunday to reject the proposal of a fiscal control board as a measure to solve the fiscal crisis on the island during International Worker's Day in San Juan. Thais Llorca / EPA

The government had been negotiating with creditors through the weekend. They managed to reach a deal to postpone some of the payments, but García said they couldn't go any further without threatening basic necessities for people who live in Puerto Rico, including health care.

The territory of 3.5 million U.S. citizens has been losing white-collar and middle-class professionals at an alarming rate. Unemployment tops 12.5 percent, and doctors have been leaving the island at the rate of one a day.

"It's basically tearing me apart," said one of those doctors, Yolanda Pagan of San Juan.

"It's such a pretty, wonderful treasure here in the Caribbean," Pagan told NBC News. "It's just gorgeous, and it's so sick right now."

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Dr. Jaime Rivera, president of the Puerto Rico Hospital Association, said health care in the territory is in "crisis."

"It's gotten really difficult at this moment," Rivera told NBC News. "I think we're hanging on the cliff already."

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