Puerto Rico’s debt crisis must be resolved by local officials in cooperation with stakeholders, including bond investors, because Washington won’t be coming to the island’s rescue, Treasury Secretary Jacob J. Lew said.
“There is not any discussion of a federal bailout, and I think that the leaders of Puerto Rico understand this has to be worked out by policy makers in Puerto Rico,” Lew said in Washington Wednesday. “They understand there is not any single external solution to this.”
At a breakfast event sponsored by the Christian Science Monitor, Lew reiterated his support for legislation granting Puerto Rico access to Chapter 9 bankruptcy protection. He said senior Treasury officials are involved in Puerto Rico conversations in Washington, New York and on the island.
The U.S. House of Representatives adjourns later today for a summer recess through August, and the Senate is schedule to start its month-long break next week.
Junk-rated Puerto Rico and its agencies have racked up more debt than any state except California and New York as the government borrowed to paper over budget deficits. Last month, Governor Alejandro Garcia Padilla said the commonwealth couldn’t pay all of its obligations. His administration will draft a debt-restructuring plan by Sept. 1.
Bills to allow some commonwealth agencies to file for Chapter 9 bankruptcy, introduced in both chambers, haven’t advanced so far because of a lack of support from Republican leaders.