Puerto Rico debt deal could hasten economic recovery

Significance

This provides a 25-year debt servicing schedule, but leaves suppliers with unpaid public service contracts as the main losers. Puerto Rico’s finances will be under renewed scrutiny this week as the US House of Representatives holds hearings on two different bills that would offer a path to statehood.

Impacts

• After a period of deep uncertainty, the debt settlement should help near-term business confidence rebound.
• Washington’s interest is linked to next year’s congressional elections, as Puerto Rico’s future is a political issue in Florida.
• The island’s infrastructure has suffered heavy damage recently, but the debt settlement should provide a framework for recovery.