A federal judge has signed a plan intended to lift Puerto Rico out of bankruptcy. The plan slices Puerto Rico’s public debt by 80% with some creditors agreeing to accept much less than they are owed.
FILE - A Puerto Rican flag flies on an empty beach at Ocean Park, in San Juan, Puerto Rico, Thursday, May 21, 2020. Puerto Rico’s nearly five-year bankruptcy battle was resolved Tuesday, Jan. 18, 2022, after a federal judge signed a plan that slashes the U.S. territory’s public debt load as part of a restructuring and allows the government to start repaying creditors.
He noted that no bankruptcy mechanisms exist for countries or U.S. states like the one Puerto Rico was granted. The board said that the plan signed by federal judge Laura Taylor Swain cuts Puerto Rico’s public debt by 80% and saves the island more than $50 billion in debt service payments as some creditors agreed to deep cuts. Board members noted the plan reduces claims against the government from $33 billion to just over $7.4 billion, with 7 cents of every taxpayer dollar going to debt service, compared with the previous 25 cents.
Jaresko brushed away those concerns, saying that while budgets were cut, there were no layoffs or agencies shut down.
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