It won’t be the first time and it probably won’t be the last, but the imminent shutdown of Puerto Rico’s government may be even more disastrous than the 2006 shutdown, say officials who spoke about the crisis to Reuters earlier this week.
The news of the potential shutdown, conveyed to the governor and the presidents of the House and Senate in a letter signed by the Secretary of the Treasury and the director of Banco Gubernamental de Fomento (Government Development Bank), indicated that if a current rescue plan is not successful — and they indicated it is not likely to be — then the government will not have the liquidity to operate and will need to shut down within three months.
The island has been dealing with an acute debt crisis for well over a year now, and its debt currently totals more than $70 billion. The authors of the letter defined the island’s economic situation as “extremely precarious.”
Some politicians on the island, including San Juan Mayor Carmen Yulín Cruz, are downplaying the letter and its claim, contending that the shutdown is a false threat. The Senate President, Eduardo Bhatia, also rejected the shutdown argument, placing blame back on the letter’s authors.
“We agree with you that times of crisis require coordinated efforts from every sector for the good of our country,” wrote Bhatia. But, he added, it’s important to understand that the Bank’s own decisions are what have brought the island to its knees.
Political infighting aside, if the government does shut down, it would inevitably be devastating for the island’s citizens. During the 2006 shutdown, the first such occurrence on the island, the government departments most central to residents’ lives and well-being, among them Education and Health, were the first to close.
Already, the debt crisis is having a disastrous impact on health. Earlier this week, international news agency EFE reported that at least 5,000 Puerto Ricans with serious medical problems who receive medicine and health care through Puerto Rico’s Medicaid equivalent, Mi Salud, are at risk because state-owned insurer ASES owes at least $39 million to providers and pharmacies. Because the Banco Gubernamental de Fomento also makes contributions to ASES and has reduced the total of those, the director of ASES says he’s having liquidity problems, which have prompted the crisis.
As with the 2006 shutdown, lawmakers are trying to avoid a recurrence of temporary government employee lay-offs and agency work stoppages by imposing new taxes.
— PNP (@pnp_pr) April 20, 2015
— Fuerza del Pueblo (@FuerzaDPueblo) April 24, 2015