Puerto Rico's Governor Won't Run for Re-Election in 2016by and
Alejandro Garcia Padilla will leave office in January 2017
Puerto Rico is seeking to reduce its $70 billion debt load
Puerto Rico Governor Alejandro Garcia Padilla said he won’t seek re-election so his administration can focus on reducing the Caribbean island’s $70 billion debt load.
"I will be focusing on attending the issues of the government above all before any of my political aspirations," Garcia Padilla said in a taped broadcast Monday.
Garcia Padilla, 44, a member of the Popular Democratic Party, which seeks to continue Puerto Rico’s commonwealth status, said he would leave his position when his term ends in January 2017. About 12 percent of Puerto Ricans had a positive view of the governor, the lowest level since Garcia Padilla took office in January 2013, according to a Nov. 2 poll conducted by El Nuevo Dia, the island’s biggest daily newspaper. Among voters of his own party, 39 percent approve of Garcia Padilla’s work as governor.
“Puerto Rico can’t change its path in the middle of the crisis,” Garcia Padilla said. "We are taking all of the possible steps within our power to restructure the debt. This effort requires all of our energy and time."
The island’s economy has contracted every year but once since 2006. Its 12.4 percent unemployment rate is higher than any U.S. state and more than double the national average. The island lost 64,073 residents in 2014, a 30 percent increase from 2013, as people seek work on the U.S. mainland.
Garcia Padilla in late June said the commonwealth was unable to repay all of its obligations and would ask bondholders to accept less than full payment on their securities. Debt restructuring talks have stalled since the administration unveiled what it called a economic recovery program in September.
Since then, the governor has been meeting with federal lawmakers and officials in Washington and testified in Congressional hearings urging lawmakers to allow some Puerto Rico public corporations to restructure their debts. The island’s agencies are unable to file for municipal bankruptcy, while their counterparts on the U.S. mainland can.
Puerto Rico bonds were little changed after the governor’s announcement, which had been anticipated for a while, said Dan Solender, who oversees about $17 billion, including commonwealth securities, as head of municipal debt at Lord Abbett & Co. in Jersey City, New Jersey. Such developments are "temporary noise" since they don’t change the financials, he said.
"Everything is really about how the economy does and how they treat bondholders," Solender said. "This is a blip in terms of the longer-term picture."
Since taking office in January 2013, Garcia Padilla has closed schools, raised the retirement age, boosted public-worker retirement contributions, and raised the sales-tax rate and the levy on petroleum taxes. The government has cut its payroll by 27 percent during the last seven years, Garcia Padilla said in his testimony on Dec. 1 before a U.S. Senate committee.
Garcia Padilla’s former secretary of state, David Bernier, resigned from his post earlier this year, fueling speculation that he would seek to become Puerto Rico’s next governor.
Puerto Rico’s non-voting representative in Congress, Pedro Pierluisi, a member of the New Progressive Party that favors statehood, has declared his candidacy for governor.