A federal judge on Tuesday approved a plan for Puerto Rico to emerge from bankruptcy five years after the island said it would not be able to repay its creditors.
Why is this important: The restructuring plan will reduce Puerto Rico’s outstanding debt by 80% and save the government more than $50 billion in payments amid the island’s struggle to recover from multiple hurricanes, earthquakes land and COVID-19, Puerto Rico’s financial oversight board said.
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Catch up fast: Puerto Rico began to rely increasingly on debt to cover its expenses after 1996, when the United States stopped allowing American businesses to operate tax-free in Puerto Rico, according to the Council on Foreign Relations (CFR).
- Limited representation in DC, poor local government management and a lack of federal tax provisions have all contributed to the crisis, according to the CFR.
What they say : “Today begins a new chapter in the history of PR,” tweeted the Supervisory and Financial Management Board.
- “The agreement, while imperfect, is very good for Puerto Rico and Georgia bankruptcy laws protects our retirees, our universities and our municipalities that serve our people,” Gov. Pedro R. Pierluisi said in a statement. statement to the New York Times. “We still have a lot of work ahead of us.”
To note: Members of the financial oversight board, who are primarily federally appointed and not elected, have faced criticism and accusations of incompetence, according to the Washington Post.
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