Puerto Rico should pay its debts

Puerto Rico should pay its debts
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Puerto Rico is at a crossroads.

Our island government is more than $70 billion in debt and there are differing viewpoints on the best way to face this issue. As we consider our options, we should look to our roots. In the Puerto Rico where I was brought up, we learned to keep our promises and pay our debts. I believe that we should rely on that ethos, those values passed on from generation to generation, as we confront our current economic challenges. 

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One of the most important questions today is whether Puerto Rico’s public corporate instrumentalities, now under the iron-fist control of the incumbent governor more than any other time before, should be allowed to file for Chapter 9 bankruptcy protection. In fact, a bill under consideration in the Judiciary Committee of the U.S. House of Representatives, H.R. 870, would allow Puerto Rico to do just that. But I strongly question whether that is the best path forward.

For one thing, Puerto Rico has benefited greatly from investors buying its bonds. This investment has funded education, social services, energy development, transportation networks and other infrastructure and community development projects for our people. If we were to take the easy way out and declare bankruptcy, the way forward would not be so easy. Investors would be understandably wary of buying our debt in the future, and we would have to pay much higher interest rates to attract funds. Why would we want to harm the next generation because we can’t handle our own debts?

What’s more, there are many viable alternatives available to us. One example is how the present rule of law in Puerto Rico already provides for the judicial branch to appoint an objective receiver for such troubled entities. The receiver can right the ship, fixing management issues and straightening out financial quandaries.

Another factor at play is that many of the holders of the bonds that constitute most of the debt of Puerto Rico’s agencies are willing to negotiate to avoid a dire situation. More than two-thirds of the bondholders of the Puerto Rico Electric Power Authority (PREPA), for example, have publicly expressed their willingness to negotiate with PREPA and have proposed a $2 billion plan that includes new investments on the island. We should also consider the public-private partnerships that have proven to be effective in the past in our island, such as the one operating our international airport and some of our tollways.

We should be looking to options such as these as we think about how we should deal with our current situation. After all, this type of creative and collaborative solution would be a chance not only to address the bond repayment issues at PREPA and other similar public instrumentalities but also to design and put in place real operational fixes that could benefit the future and reverse the mismanagement and mistakes that have pushed us to this situation in the first place. 

As Puerto Ricans, we were raised to know that we pay our debts and we keep our promises. When it comes to the body politic that represents all of us, this situation is no different. Let’s not throw an obstacle into our long-term prospects and hurt our ability to access the capital markets down the road. Instead, let’s take the high road, follow our moral values and abide by our commitments. 

González is vice chairwoman of the New Progressive Party of Puerto Rico and of the Republican Party in Puerto Rico. She is a former Speaker of the Puerto Rico House of Representatives, where she currently serves as minority leader.