Puerto Rico Revises Debt Recovery Plan, Leaves $16 Billion Financial Gap

Back in September 2015, Puerto Rico's top economic officials announced a debt recovery plan, stating that the country would need about $14 billion of debt relief over the next five years in order to help the U.S. territory to revive its economic growth and reduce its vast debt.

As it turns out, the estimates were far too optimistic.

According to The New York Times, officials in the Latin American U.S. territory stated on Monday that it now expects creditors to give the country a $16 billion break instead, as the financial situation of the island territory turned out to be far worse than expected.Puerto Rico's officials further stated that they had run updated forecasts for the next 10 years as well. The results of the 10-year forecast were not very encouraging, as the officials stated that without debt relief, the financial gap could balloon to a very hefty $24 billion.The Obama administration has stated that it aims to give the island territory the same bankruptcy rights as other U.S. states through a law known as Chapter 9. If granted, Chapter 9 would enable Puerto Rico to shed or restructure some of its debts under the supervision of a judge.Puerto Rico's financial troubles have become a pivotal aspect in the campaign of a number of presidentiables, with Jeb Bush and Hillary Clinton stating that Puerto Rico must be granted Chapter 9 rights.

DYI Comments:  DYI agrees that Puerto Rico deserves the same type of laws governing our other 50 States.  Having the ability to file Chapter 9 will allow this island protectorate to work out its problems with their creditors on the same level playing field as our other U.S. States.  

No doubt Puerto Rico has borrowed money to a level so high that any sane person would realize impossible to pay.  Of course it takes two to tango, investors were very willing to shovel vast amounts of Dollars despite any prudent man would find repayment increasingly dubious.  Politicians and investors willing to go over the cliff together.  

There is a third party as well:  The U.S. Federal Reserve who has held rates for so long at the sub atomic level investors were desparate for yield. This became the overall backdrop environment of willing investors and eager politicians(vote buying).  With normilized interest rates investors would have other options for their monies.  Going over the cliff would have been far more difficult as interest rates started at a much higher level.

Unfortunately this arrives, like many things in life at a bad time, as the world economy is very possibly entering recession.

DYI wishes the citizens of Puerto Rico the best of luck!

DYI