A federal judge has approved Puerto Rico's exit from bankruptcy
A MARTINEZ, HOST:
A federal judge has approved a plan that will allow Puerto Rico to begin emerging from bankruptcy. The U.S. territory entered bankruptcy in 2017 after it stopped making payments on more than $70 billion of loans. The island's leaders say this new deal struck with the island's creditors opens the path for Puerto Rico's economic recovery. Here to tell us more, we're joined by NPR's Adrian Florido. Adrian, first off, this deal was approved by a federal judge yesterday. What's in the deal?
ADRIAN FLORIDO, BYLINE: Well, it's a deal that's negotiated a huge discount on how much of its original debt Puerto Rico will have to repay. Natalie Jaresko, who leads the board that Congress appointed to negotiate this deal on Puerto Rico's behalf, called this a new day for the island.
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NATALIE JARESKO: This period of financial crisis is coming to an end, and the uncertainty that every Puerto Rican, every business on this island, felt for so long can now be turned into stability.
FLORIDO: This deal, A, resolves the biggest chunk of debt that Puerto Rico and its creditors were still fighting over - $30 billion. And there's some disagreement on this, but the government says it's getting an 80% discount on that $30 billion, which will free up a lot of money for public services.
MARTINEZ: That sounds like a very big discount. I mean, how are the island's leaders responding?
FLORIDO: Well, most of its elected leaders, including the governor, are calling this a good and necessary deal for Puerto Rico. The island's money problems have devastated the government's ability to provide basic services on the island in recent years, and the hope among the island's leaders is that this deal will slowly start to improve that picture, in part by getting Puerto Rico to a place where its credit is good enough to borrow money again.
MARTINEZ: Now, you say leaders hope this deal will improve the government's ability to provide basic services. Why just hope?
FLORIDO: Well, at least publicly, the island's leaders say that they are convinced that that will happen, but among many everyday Puerto Ricans, there is a lot of skepticism about this deal and, frankly, a lot of anger.
FLORIDO: Well, first, because the board that negotiated this deal was appointed by Congress, not elected by Puerto Rico's people. Many people also believe that although Puerto Rico is getting a very big discount on this debt, it's not enough and that its payments are still going to be so big that it'll be driven to bankruptcy again. The judge who approved this deal yesterday said that is not going to happen, that this deal is sustainable. But this is Mercedes Martinez. She is the president of a teachers union that has fought this deal really fiercely.
MERCEDES MARTINEZ: The worst is just about to come when we see that we are not going to have budget for essential services in our country - for education, for health. Things are not going to get better; they're going to get worse now that this has been approved.
MARTINEZ: Adrian, are there very concrete ways we'll know that this deal will be affecting everyday Puerto Ricans?
FLORIDO: Yeah. You know, in some ways, this deal is penciling out on the backs of working Puerto Ricans. Take teachers, for example, who earn very little in Puerto Rico. They're no longer going to get guaranteed pensions going forward and instead have to start contributing to Social Security and 401(k)-style retirement plans. And retired teachers already receiving pensions, they're not going to get another cost-of-living adjustment for the rest of their lives. So those are just a couple of examples of the human costs of this bankruptcy.
MARTINEZ: That's NPR's Adrian Florido. Thanks a lot.
FLORIDO: Thank you, A. Transcript provided by NPR, Copyright NPR.