NEW YORK, NY - DECEMBER 02: People protest outside of Wall Street against cutbacks and austerity measures forced onto the severely indebted island of Puerto Rico on December 2, 2015 in New York City. Puerto Rico made a $355 million payment on Tuesday on its bond debt to stave off a default. Officials have warned that the commonwealth's fiscal position remain dire. (Photo by Spencer Platt/Getty Images)
Photograph by Spencer Platt—Getty Images
Puerto Rico, struggling to make its debt payments, outlined an increase in its financing gap on Monday, saying it now projects a $16.06 billion hole to fill, cumulatively, over the next five years, an increase of $2.1 billion from a September projection.
The Government Development Bank said in an updated Fiscal and Economic Growth Plan (FEGP) released on Monday that at the request of creditors, it had added a 10-year financing gap projection. It now estimates its debt financing hole to grow to $23.9 billion through 2025.
Facing over $70 billion in debt and a 45% poverty rate, Puerto Rico is trying to solve an economic crisis before it hits substantial debt payments in May and July. It has defaulted on some of its debt and is trying to persuade creditors to take concessions.
The increases in the financing gaps occur, “even with the inclusion of economic growth and the implementation of all of the proposed measures in the FEGP,” the Government Development Bank (GDB) said in a separate statement.
“Since the release of the FEGP in September, the fiscal and humanitarian crisis on the Island has worsened, and the Commonwealth is now facing even larger estimated financing gaps in both the near and long term. Specifically, the General Fund revenues included in the FEGP have decreased from a previous estimate of $9.46 billion for FY (fiscal year) 2016 to $9.21 billion,” the GDB said.
GDB said that as of Jan. 10, it had $667 million of total net liquidity and $535 million in debt service payments during the next 6 months.
“As previously indicated, we expect to sit with our creditors shortly and put forth a comprehensive restructuring proposal,” Melba Acosta, President of the GDB said in the statement.
Puerto Rico, as a commonwealth of the United States with 3.5 million people, is not allowed to restructure its debt under existing bankruptcy law. It has sought unsuccessfully to convince the U.S. Congress to vote for a change.
However, in one development highlighted on Monday by its representative to Congress, Pedro Pierluisi, Puerto Rico’s hospitals will now receive the same basic reimbursement rate, known as the base rate, by the U.S. Centers for Medicare and Medicaid Services (CMS).
This was included in the budget passed by the U.S. Congress in December.
“The Congressional Budget Office (CBO) estimates that, as a result of this legislative change, Puerto Rico hospitals will receive $618 million more in federal reimbursement payments between 2016 and 2025, an average of over $60 million per year,” said a statement released by Pierluisi on Monday.