Puerto Rico is on the verge of bankruptcy

The governor says the island owes 73-billion dollars

Copyright 2014, The Associated Press

(CNN) – “I guess I’m going to have to go back to the block.” Back to New York City, or at least that is what Andres Correa is considering if business does not improve.

Like Andres, thousands of Puerto Ricans have left the island in search of better opportunities. “I used to do a lot of sales a day. Now, I’m doing in a month what I used to do in a week,” said Andres.

Puerto Rico has been in a recession for about a decade. Small businesses have been seriously affected but so have residents in general. Some, like Hector Ortiz, have more than one job and are still struggling.

Ortiz said, “Right now I work as a psychologist. I have to run two different offices in two different towns. Besides that I have to teach here at the university some courses and I have to do some workshops in order to survive.”

And surviving is pretty much the consensus.

In the past two years, Governor Garcia Padilla’s administration has approved over 80 new taxes, and as of July 1st, Puerto Rico will have the highest sales tax of any United States jurisdiction: 11.5 per cent. These measures look to increase cash flow and help repay the national debt which reaches almost 73-billion dollars.

This is Puerto Rico’s financial district, a mile-long stretch known as “La Milla de Oro,” the Golden Mile, where the island’s main banks have their corporate offices, but even this area has not been immune to the economic crisis. Some of the banks have actually closed their doors permanently.

Governor Padilla said on Monday that the island does not have the means to pay the national debt which since the 90’s has increased by a staggering 50-billion dollars. Some blame it on the elimination of tax credits for corporations which then reduced industrial incentives.

Senator Eduardo Bhatia, of the popular Democratic Party, “Puerto Rico started borrowing to make sure that the revenues were there. To keep the government running, and I think some previous administrations over borrowed, and that is how we got to 73-billion dollars.”

The United States has already said that it will not bail Puerto Rico out of its financial crisis.

An effort to include the island in the Chapter 9 Bankruptcy code is underway, but that bill is stalling in Congress.

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