U.S. lawmakers are willing to consider assistance provisions short of a bailout for Puerto Rico, matching the request of their non-voting representative in Congress, Representative Steny Hoyer said.
“I think technical assistance, depending on what it means by technical assistance, I think clearly would be available, as it would be to any state or territory of the United States,” Hoyer, the second-ranking House Democrat from Maryland, told reporters today in Washington.
The U.S. House will vote on a spending bill as soon as next week that would encourage the Treasury Department to “provide technical assistance to Puerto Rico on stabilizing and strengthening public financial management and financial management systems,” according to a report filed last month along with the text of the bill directing spending.
The House Appropriations Committee approved the measure on June 25 on a mostly party-line vote.
The language in the measure for fiscal year 2015, which starts Oct. 1, is new. There’s not a similar provision in the current year’s spending bill.
“The current government in Puerto Rico, which has overseen a loss of 38,000 net jobs in the 18 months it has been in office, is clearly in need of technical assistance from the federal government to improve the deteriorating economic and fiscal situation on the island,” the non-voting representative, Resident Commissioner Pedro Pierluisi, said today in an e-mailed statement.
Technical assistance may include helping the Puerto Rico government improve its estimates of tax revenues and government expenditures, he said.
“The current government has underestimated expenditures and overestimated revenue, often badly so, which has undermined its credibility with investors, credit rating agencies and the public,” Pierluisi said. “It clearly could use help in this regard.”
The self-governing territory of 3.6 million and its agencies have $73 billion of debt. Prices on some Puerto Rico bonds have been trading at distressed levels for almost a year on concerns about the island’s ability to repay all of its obligations. Its economy has contracted about 11 percent since 2006, according to its Planning Board. Puerto Rico’s 13.8 percent unemployment rate is more than double the U.S. average.
Prices on commonwealth debt have fallen even more after lawmakers last month approved a bill that would allow certain public corporations to restructure debt. Commonwealth securities lost 6.4 percent last week, the steepest decline since at least 1999, S&P Dow Jones Indices show. The entire municipal market dropped 0.5 percent last week.
The credit ranking of the island, ceded to the U.S. in 1898 after the Spanish-American War, was cut to speculative grade in February by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.