The U.S. territory is currently more than $72 billion in the red, according to CNN Money and Business Insider, which may not sound like a big deal to Americans (who are facing a collective $11.91 trillion debt at the moment) — but for an island nation with only 3.6 million people, Puerto Rico’s debt per capita is higher than any single U.S. state.
Business Insider states that Puerto Rico is unable to declare bankruptcy “according to its own laws” as a commonwealth. This means that the island will have to deal with its creditors directly, and that means dealing with Wall Street.
In a recent interview with the New York Times, Governor Padilla put it very simply: “The debt is not payable. There is no other option. I would love to have an easier option. This is not politics, this is math.”
As CNN Money stated, Puerto Rico is no stranger to financial crises; the island has been struggling for years to lower government spending and energy costs, and in the past it has been able to defer debt payments or lengthen repayment schedules.
Now, Governor Padilla is emphasizing that the only way it will be able to survive is if all Puerto Ricans pull together and if the nation’s creditors “share the sacrifices.”
But will perseverance and patience pay off this time? The numbers suggest that Puerto Rico may have a harder time bouncing back: citizens in all socioeconomic levels have left the island in droves searching for better jobs, and between 2010 and 2013 the number of Puerto Rican immigrants to the U.S. was around 48,000 people per year.
Government officials have reportedly already begun working with Wall Street lenders to pay back the country’s bonds, but the effectiveness of this strategy remains to be seen; as more Puerto Ricans leave the territory, the government’s tax revenue decreases and makes it harder to pay back creditors.
“My administration is doing everything not to default,” Governor Padilla told the Times. “But we have to make the economy grow. If not, we will be in a death spiral.”