Business

Puerto Rico: US calls for creditors to make sacrifices

Jack Lew Image copyright Getty Images

US Treasury Secretary Jacob Lew urged Puerto Rico's creditors to make sacrifices that would allow the territory to restructure its debt.

Mr Lew said that unless both sides made sacrifices, "there is no path out of insolvency and back to growth."

Puerto Rico is in its tenth year of rescission and struggling to cope with $70bn (£49bn) in debt.

Several attempts at negotiations between the Puerto Rican government and creditors have failed.

"The people of Puerto Rico are sacrificing, but unless that sacrifice is shared by creditors in an orderly restructuring, there is no path out of insolvency and back to growth," he said during a visit to the US territory.

Mr Lew said the Treasury Department had dedicated a team to working with Puerto Rico on a "daily basis".

He has in the past ruled out the possibility of a federal bailout for the territory.

Puerto Rico defaulted on part of its debt at the beginning of January and is on track to miss larger payments in the coming months.

Puerto Rico does not have access to Chapter 9 of the US bankruptcy code, the provision that allowed cities such as Detroit to restructure their debts.

Puerto Rico, with support from President Obama, is pushing Congress to change that law and grant them permission to use the Chapter 9 provision.

In 2015 a US judge struck down a law passed by the Puerto Rican government that would have allowed it to restructure its debt. The judge ruled the new law was unconstitutional.

More on this story