Religious leaders in Puerto Rico have welcomed a debt restructuring plan that will reduce the stress on the U.S. territory’s economy and called for more focused efforts to reduce poverty and prioritize economic development.
“Puerto Rico has now the opportunity for a path forward, and to forge a comprehensive strategy for recovery and economic development,” the leaders said in a March 14 statement.
Archbishop Roberto O. González Nieves of San Juan, Bishop Ruben A. González Medina of Ponce and Father Enrique Comacho, executive director of Caritas Puerto Rico, which is affiliated with Catholic Charities USA, were among 15 religious leaders who joined the statement.
The plan to restructure the debt, reached after years of negotiations among creditors, a federal board and Puerto Rican government representatives, goes into effect March 15.
Puerto Rico announced in 2015 that it could not afford to continue payments on the $70 billion in debt it incurred. A review uncovered decades of mismanagement, corruption and excessive borrowing. In addition, Puerto Rico has more than $50 billion in public pension liabilities.
Congress established a financial management and oversight board in response, a step that allowed Puerto Rico in 2017 to file what became the largest municipal bankruptcy in U.S. history.
The plan cuts Puerto Rico’s debt by 80% with some creditors agreeing to the deep cuts, saving more than $50 billion in debt service payments.
For years, Archbishop González has been a proponent of debt restructuring. Citing how high debt payments exacerbated poverty and economic inequality, he met repeatedly with members of Congress to call for relief measures and practical mechanisms to allow Puerto Rican officials to better respond to the financial crunch.
Puerto Rico’s economic crisis worsened in 2017 when hurricanes Maria and Irma devastated much of Puerto Rico. Then in 2020, strong earthquakes severely damaged broad sections of the island and were followed by the coronavirus pandemic, all of which added to its monetary woes.
Under the agreement signed in January by federal Judge Laura Taylor Swain, the oversight board reduced claims against the government from $33 billion to $7 billion. The arrangement calls for Puerto Rico to pay 7 cents of every taxpayer dollar for debt service, slashed from the previous 25 cents.
“This period of financial crisis is coming to an end. We have accomplished what many thought was impossible,” Natalie Jaresko, the board’s executive director, said when the agreement was announced, according to The Associated Press.
Despite the restructuring agreement, Archbishop González said additional measures are necessary.
“We should make sure that the debt payments do not come at the expense of the hunger of our people, including our children, 60% of whom live in stark poverty,” he said in a statement released March 14 by Jubilee USA, an alliance of faith-based development and debt relief advocacy organizations.
In their statement, the religious leaders called on Congress, the White House, creditors and other stakeholders to begin additional measures that would prevent Puerto Rico from having to renegotiate its debt again and to ensure that responses to climate change and “staggering child poverty” are carried out.
The leaders urged that economic development be prioritized so that manufacturing jobs can expand and sustainable infrastructure be built.
They also pressed for at least $50 billion of additional disaster recovery aid and that distribution of the $55 billion already approved be accelerated.
Other measures sought by the group include moving Puerto Rico and other U.S. territories to parity with U.S. states on nutrition, child poverty reduction, Medicaid, Medicare and tax relief programs, and the importance of a “debt audit” to promote transparency and accountability and stop “corruption and impunity.”
“As the end of bankruptcy is lauded, we continue to call for a true jubilee — a world where we all have enough, can live in dignity and honor the greatness of our creator,” the statement concluded.
Others signing the statement were leaders of the Methodist, Lutheran, Presbyterian, Christian Church (Disciples of Christ), Baptist and United Evangelical churches in Puerto Rico; the Council of Churches of Puerto Rico, Caribbean Institute of Ecumenical Action and Formation, and the Puerto Rico Bible Society.
Among those endorsing the statement were Archbishop Paul S. Coakley, chairman of the U.S. bishops’ Committee on Domestic Justice and Human Development, and Dominican Sister Donna Markham, president and CEO of Catholic Charities USA.