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As Deadline Looms, Puerto Rico's Debt 'Is Not Payable,' Governor Says

"This is not politics; this is math," Alejandro Garcia Padilla says of the island's $73 billion debt load.
Image: Puerto Rico Struggles With Impending Debt Crisis
Exteriors of Puerto Rico capital, San Juan, and a view of the legislature building.) / Getty Images — file

Puerto Rico is set to release a key report by former International Monetary Fund economists on its financial stability Monday, officials said Sunday, which could point toward a fix for the island but has the potential to rattle bond prices if its predictions are pessimistic.

Gov. Alejandro Garcia Padilla told The New York Times that the island would probably seek significant concessions from as many as all of its creditors because "the debt is not payable."

"There is no other option," he said. "I would love to have an easier option. This is not politics; this is math."

Puerto Rico, struggling with a $73 billion debt load and faltering economy, is facing crunch time this week with a deadline to agree on a budget, as well as a July 1 deadline to make a $655 million payment on its general obligation debt, while its struggling utility PREPA faces a $400 million payment.

"We have to recognize we have a very serious problem with the fiscal situation of the island," House speaker Jaime Perello told reporters Sunday.

Perello said he would be meeting with Gov. Alejandro Garcia Padilla on Sunday night and would ask him for a copy of the report. After presenting the report Monday, work groups should be established, he said.

Unlike mainland U.S. cities like Detroit and Stockton, California, Puerto Rico can't declare bankruptcy because it's a commonwealth, and default could create a legal and financial limbo that could take years to sort out, The Times reported.

Puerto Rico in February engaged a group of former IMF economists to analyze its economic and financial stability and growth prospects. A separate report was also commissioned by consulting firm Conway MacKenzie.

— Reuters and NBC News