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Economics

Puerto Rico Is Running Out of Options

Congress averts its eyes from the fiscal disaster.
In San Juan on Nov. 5, protesting cuts in federal spending for the island’s Medicaid and Medicare programs.

In San Juan on Nov. 5, protesting cuts in federal spending for the islands Medicaid and Medicare programs.

Photographer: Christopher Gregory for Bloomberg Businessweek

Puerto Rico doesn’t look as if it’s on the verge of economic disaster. Tourists are still flocking to its beach resorts. Malls, anchored by department stores like Macy’s and JCPenney, are full of shoppers. At rush hour, roads are clogged with late-model luxury SUVs. But after years of borrowing to prop up the island’s stagnant economy, the government faces $720 million in debt payments in the next two months, and it may run out of cash as early as December.

Government officials say meeting those obligations may leave them short of the cash they need to cover payroll, retirement benefits, and Christmas bonuses. Governor Alejandro García Padilla has said he’ll consider cutting hours for public workers to keep essential functions running. García Padilla has already closed some schools, delayed tax rebates, and suspended payments to government suppliers.