Puerto Rico’s Debt: A dead end

Puerto Rico’s debt is just over $70 billion . It’s comparable with Argentina’s previous debt in 2001 of $93 billion. The debt-to-GDP, GDP which is the ratio between a country’s government debt and its gross domestic product, is a way to understand how overwhelmed Puerto Rico is of its debt.

Usually, when a state is at debt, the government raises its taxes and fees and Puerto Rico’s government has already done so. They have managed to increase the tax income from businesses from 4% to 10.5%. Puerto Rico now has the highest sales taxes of any U.S. state or terrority.

Looking at the pattern of Puerto Rico’s population, many are moving from the state while many are pondering whether they can survive this crisis or not.

The state’s political situation is not helping them in their crisis. Puerto Rico has no representant in the white house and can there fore not influence the situation of the crisis by legislation or reforms.

There is a high probability that Congress will not act until this crisis worsens significantly, and even then it might try to pass the responsibility away.

At this point in time, there’s no expectation of a bright future for the Puerto Rico fincancial crisis.


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