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| Puerto Rico governor says US territory 'can't pay $72bn debt' | Puerto Rico governor says US territory 'can't pay $72bn debt' |
| (about 1 hour later) | |
| Puerto Rico's governor has said the US territory cannot pay its $72bn (£45bn) debt and is close to defaulting ahead of emergency talks with legislators. | Puerto Rico's governor has said the US territory cannot pay its $72bn (£45bn) debt and is close to defaulting ahead of emergency talks with legislators. |
| Governor Alejandro Garcia Padilla admitted the island was close to an economic "death spiral", in an interview with the New York Times. | Governor Alejandro Garcia Padilla admitted the island was close to an economic "death spiral", in an interview with the New York Times. |
| But White House spokesman Josh Earnest said that the US government was not contemplating a federal bailout. | But White House spokesman Josh Earnest said that the US government was not contemplating a federal bailout. |
| The self-governing US commonwealth has been in a recession since 2006. | The self-governing US commonwealth has been in a recession since 2006. |
| Mr Garcia Padilla is expected to air a pre-recorded televised address later on Monday after meeting with legislators to discuss a $9.8bn budget. | Mr Garcia Padilla is expected to air a pre-recorded televised address later on Monday after meeting with legislators to discuss a $9.8bn budget. |
| The budget, which has to be approved by Tuesday, calls for $674m in cuts and sets aside $1.5bn to help pay off the debt. | The budget, which has to be approved by Tuesday, calls for $674m in cuts and sets aside $1.5bn to help pay off the debt. |
| The governor is hoping to defer debt payments while negotiating with creditors, his spokesman told reporters on Sunday night. | The governor is hoping to defer debt payments while negotiating with creditors, his spokesman told reporters on Sunday night. |
| 'Share the sacrifices' | 'Share the sacrifices' |
| Mr Garcia Padilla said he had no choice but to seek a restructuring, saying: "This is not politics, this is math." | Mr Garcia Padilla said he had no choice but to seek a restructuring, saying: "This is not politics, this is math." |
| Creditors must now "share the sacrifices" already imposed on the island's population of 3.6 million, he told the New York Times. | |
| "If they don't come to the table, it will be bad for them," he told the newspaper. | "If they don't come to the table, it will be bad for them," he told the newspaper. |
| "What will happen is that our economy will get into a worse situation and we'll have less money to pay them. They will be shooting themselves in the foot," he added. | "What will happen is that our economy will get into a worse situation and we'll have less money to pay them. They will be shooting themselves in the foot," he added. |
| Analysis: Samira Hussain, BBC News, New York | |
| Wall Street used to be confident that Puerto Rico would be able to find a way out of its current financial mess. But that certainty no longer exists. | |
| In saying Puerto Rico cannot pay its $72bn in public debt, the governor has basically told Wall Street that the island is in default. On Monday, Puerto Rican bonds dropped by 12%. | |
| But why should anyone living on America's mainland care about an island with 3.6 million people? | |
| Unlike Greece, where large institutions hold most of its debt, the same is not true for Puerto Rico. | |
| Much of its debt is held by individual investors in the United States, in financial instruments like mutual funds. That exposes more individual Americans to its financial instability. | |
| Puerto Rico must now negotiate with its creditors for some kind of deal. And as we are seeing with Greece, negotiating with creditors can be a long and messy process. | |
| Although the island is a US territory whose residents are granted citizenship, it does not have the same status as other states and municipalities. | Although the island is a US territory whose residents are granted citizenship, it does not have the same status as other states and municipalities. |
| This means it is unable to file for bankruptcy in the same way that the US city of Detroit, Michigan, did in 2013 if it cannot raise enough money to repay its debts. | This means it is unable to file for bankruptcy in the same way that the US city of Detroit, Michigan, did in 2013 if it cannot raise enough money to repay its debts. |
| The territory's situation has drawn comparisons to Greece, where the government has shut banks and imposed restrictions on cash withdrawals. | The territory's situation has drawn comparisons to Greece, where the government has shut banks and imposed restrictions on cash withdrawals. |
| Puerto Rico | Puerto Rico |
| • In 1898, the Spanish lost the Caribbean Island at the end of the Spanish-American war and it came under US control | • In 1898, the Spanish lost the Caribbean Island at the end of the Spanish-American war and it came under US control |
| • In 1917, its people became US citizens - they are allowed to serve in the military but still do not have the right to vote in US presidential elections | • In 1917, its people became US citizens - they are allowed to serve in the military but still do not have the right to vote in US presidential elections |
| • The country is a self-governing territory of the US but the US Congress and the president have ultimate control, providing social services, foreign policy and defence | • The country is a self-governing territory of the US but the US Congress and the president have ultimate control, providing social services, foreign policy and defence |
| • It has a congressional representative who does not have voting rights | • It has a congressional representative who does not have voting rights |
| Puerto Rico profile | Puerto Rico profile |