Puerto Ricans march in May Day strike as debt deadline nears

AP News
Posted: May 01, 2017 10:20 AM

SAN JUAN, Puerto Rico (AP) — Hundreds of protesters blocked roads in Puerto Rico's capital Monday as May Day demonstrators angered by a decade-long economic crisis marched against looming austerity measures and demanded an audit to identify those responsible for running up a $70 billion public debt load.

Demonstrators wearing black T-shirts banged large wooden placards painted with a black Puerto Rican flag against the ground as they headed toward the U.S. territory's financial center.

"Ricky is selling the island!" they yelled in reference to Gov. Ricardo Rossello, whose administration is expected to announce soon whether it has reached a deal with bondholders to restructure a portion of the debt or embrace a bankruptcy-like process.

The protests and strike affected services at Puerto Rico's largest public hospital, paralyzed the bus system and forced many businesses to close. Demonstrators also briefly blocked traffic near San Juan's international airport, prompting some travelers to walk along the highway dragging suitcases.

Puerto Rico is struggling to emerge from a recession caused in part by previous administrations that for decades borrowed billions of dollars to cover budget deficits. In June 2015 the island's then-governor announced that the debt was unpayable, and the government has since racked up multimillion-dollar defaults on government-issued bonds that were popular because they were triple tax-exempt. This sparked a flurry of lawsuits from creditors seeking to recuperate their investments.

Last year the U.S. Congress approved a rescue package that led to the creation of a federal control board charged with overseeing Puerto Rico's finances. In recent weeks the board and Rossello have been approving austerity measures aimed at cutting costs as they warn the government is running out of money.

Puerto Rico is preparing to cut public employee benefits, increase tax revenue, hike water rates and privatize government operations, among other things.

The measures have angered many who say the working class has been hit the hardest, and Monday's protests came hours before a midnight deadline for the expiration of a mechanism of that has protected the government from creditor lawsuits.

Negotiations with bondholders to restructure part of the debt are continuing, said Elias Sanchez, the governor's representative to the board.

"We are committed and working on a genuine effort to reach an agreement with bondholders, but we're not dismissing any other course of action," Sanchez said.

On Saturday the government offered to pay 50 cents on the dollar to holders of general obligation and sales-tax bonds that are backed by Puerto Rico's constitution. The offer provides $16.75 billion to cover a $36.38 billion debt, though bondholders could receive another $8 billion if the government receives more money than anticipated over the next decade. Bondholders dismissed the offer, however.

Puerto Rico got a brief respite when Democratic lawmakers in Washington won $295 million to ease the island's Medicaid burden as part of a more than $1 trillion federal spending bill approved Sunday. Democrats had sought some $500 million, but obtained more than Republicans had initially offered.


Associated Press reporter Andrew Taylor in Washington contributed to this report.