Without congressional action to change tax code, health care funding, and bankruptcy laws, Puerto Rico’s fiscal crisis will only grow worse and its enormous debt will never be paid off, according to a new report commissioned by the island territory. Unless Washington lawmakers intervene, Puerto Rico’s fiscal shortfall will balloon to $27 billion by 2020. And even with major reforms and assistance, the island will still need to renegotiate the debt terms of the $73 billion it owes to creditors in order to keep up with payments.
In June, Puerto Rican Governor Alejandro Padilla said that default was imminent. “The debt is not payable,” Gov. Padilla told the New York Times. “There is no other option. I would love to have an easier option. This is not politics, this is math.”
The island has suffered through a decade of little to no economic growth and has not recovered from the financial crisis in 2008. That, combined with structural issues and low tax collection, have led to the current catastrophe.
“We built up a massive debt when the population was still growing and young,” Raul Figueroa, a demographer in Puerto Rico, told ABC News. “Now we have to pay it when the population is dropping and becoming older.”
The fiscal crisis has gotten so bad that 64,000 people reportedly left for the U.S. mainland in 2014, the highest number in a decade. A third less, or 49,000, made the same journey in 2013, and more than 200,000 have now left since 2010. Puerto Rico’s unemployment rate is currently 12 percent, worse than any state. Its labor participation rate is even worse at 40 percent, a huge drop from the 62 percent average in the United States.
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