U.S. Treasury Secretary Jack Lew on Wednesday said that while the Obama administration was ready to do all it could to help debt-ridden Puerto Rico, only Congress could deliver truly effective change.
Lew, speaking in San Juan where he met with the island’s governor, Alejandro Garcia Padilla, as well as business and labor leaders, last week urged Congress to urgently pass legislation by the end of March to help the island struggling with $70 billion debt.
He has called for legislation to allow Puerto Rico to restructure its debts paired with independent fiscal oversight.
“We will leave no stone unturned in looking for things we can do both administratively and using our convening authority to … help solve these problems,” Lew said at a press briefing on Wednesday morning. “But using all the tools we have still won’t be as effective as Congressional action. That’s why the time for Congress to act is now.”
Puerto Rico has begun to default on some of its bond issues and is negotiating with creditors to restructure its borrowings, but is facing a lawsuit from bond insurers who backed its debt.
Extending Chapter 9 to Puerto Rico, which currently does not have the ability to put its public agencies into bankruptcy, has been long debated. Democrats have been generally supportive of proposals but a number of Republicans have shown skepticism.
Lew reiterated there would be no federal bailout, saying Puerto Rico won’t be able to find a “path out of insolvency and back to growth” unless creditors make sacrifices in an orderly restructuring.
Still, he stressed the Treasury was doing all it could.
Speaking to reporters later on Wednesday, Lew said the Treasury has bolstered its team dedicated to Puerto Rico, providing technical assistance on issues such as revenue collection.
“The Treasury team is part of a broader administration-wide effort jointly led by the White House,” he said.
Lew added that a restructuring could also help Puerto Rican retirees. The island’s main pensions face a roughly $45 billion unfunded liability that stands to be depleted by 2019.
“Coming out of a comprehensive restructuring, I think that pensioners could end up with more security than they have right now,” Lew said.
A legislative solution could also include introducing a control board for the island. Lew said that any oversight would have to be done in a way that is respectful of Puerto Rico’s system of self-government.