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Adden

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Report Gives Damning Review Of Puerto Rico's Finances
#21877389 - 06/30/15 10:18 AM (8 years, 6 months ago) |
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Report Gives Damning Review Of Puerto Rico's Finances
Calls For Reforms And Restructuring Of Debts
June 28 (Reuters) - Puerto Rico needs to restructure its debts and should make reforms including cutting the number of teachers and raising property taxes, a report by former International Monetary Fund economists on the Caribbean island's financial woes said.
The report, which was obtained by Reuters, gave a damning review of how Puerto Rico has arrived at its current state, which it said requires both structural reform and debt restructuring to fix.
"Puerto Rico faces hard times," the report said. "Structural problems, economic shocks and weak public finances have yielded a decade of stagnation, outmigration and debt... A crisis looms."
The report even suggests the restructuring of general obligation debt, which could be a precedent-setting move as investors usually regard as sacrosanct.
Social reforms proposed include suspending the minimum wage and reducing electricity and transport costs. The island must overcome a legacy of weak budget execution and opaque data, the report said. Puerto Rico Governor Alejandro Garcia Padilla is expected to give a televised address on Monday, according to local media, and officials said they expected to discuss the report with him during the day.
The island is struggling with a $73 billion debt load and faltering economy while its Government Development Bank is running low on cash. It is facing crunch time this week with several bond payments due while its struggling power utility PREPA is in talks to avoid a possible default.
The report was written by former IMF economists, who were engaged in February by the Government Development Bank to analyze the island's economic and financial stability and growth prospects.
The document, first posted on Puerto Rico media websites, was verified as authentic by one of the authors. The governor's office and a spokesman for the Government Development Bank were not immediately available for comment. The report is expected to be officially released on Monday.
It said Puerto Rico would need to seek relief from principal and interest payments falling due from 2016 to 2023. A debt restructure could be achieved via a voluntary exchange of existing bonds for new ones with a longer or lower debt service profile, the report said. The island has the scope to raise revenue by $4 billion and save $2.5 billion annually by 2025, it said.
The report said any restructuring of general obligation, or central government debt, would set a precedent as "no U.S. state has restructured (such debt) in living memory" and said any attempt would face legal challenge. However, it said there are limits to how much more expenditures can be cut or taxes raised.
According to the report, Puerto Rice has 10 percent more teachers than a decade ago while student numbers have dropped 40 percent.
The New York Times on Sunday cited Governor Padilla saying that the island's debts were not payable and that creditors would probably have to take significant concessions such as five-year payment deferrals.
This coming week "is the tipping point," said Adam Weigold, senior portfolio manager at Eaton Vance, on Friday. Puerto Rico's debt problems could lead to a reduction in government services, investors said. However, a source familiar with the situation said on Friday the island is not contemplating a partial or full shutdown of government services.
"Next week is probably a good buying opportunity," said Daniel Hanson, analyst at Height Securities, on Friday. "We expect a lot of downside in all the bonds."
Puerto Rico's benchmark general obligation bonds issued in March 2014 slid on Friday to close at a record low of 77 cents on the dollar to yield 10.84 percent.
(Reporting by Megan Davies and a contributor in San Juan; Additional reporting by Edward Krudy; Editing by Toni Reinhold and Richard Borsuk).
...thoughts?
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Yrat
Hello

Registered: 11/08/07
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: Adden]
#21877618 - 06/30/15 11:20 AM (8 years, 6 months ago) |
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-------------------- "There are a thousand hacking at the branches of evil to one who is striking at the root." -Henry David Thoreau Strike The Root
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Stonehenge
Alt Center


Registered: 06/20/04
Posts: 14,850
Loc: S.E.
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: Yrat]
#21878315 - 06/30/15 02:12 PM (8 years, 6 months ago) |
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Yeah, pr is having problems too. Is there any country that isn't? Its not a usa state, btw.
Greece is hammering the stock market, many other actors are warming up in the wings to sing the same song. How much longer can the present system keep going before it falls down? I mean world wide. If there is a collapse even the strong countries will be hurt badly.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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TravelerOfSorts
sober pro


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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: Stonehenge]
#21878598 - 06/30/15 03:22 PM (8 years, 6 months ago) |
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Solar city invest?
-------------------- a soul of solitude but a master of ecstacy in waiting for my rebirth cycle i have hopes that when mushrooms find me it will occur then and i can go about the world as a medicine man walking staff in one hand spaceship in the other a journeyman of nature soon to be stepping up to novice hopefully i will have time to become an expert, and i believe only in death will i become a master
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LunarEclipse
Enlil's Official Story


Registered: 10/31/04
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: Yrat]
#21879506 - 06/30/15 06:34 PM (8 years, 6 months ago) |
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Quote:
Yrat said:
the guy's laugh....
"He pissed himself".
-------------------- Anxiety is what you make it.
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LunarEclipse
Enlil's Official Story


Registered: 10/31/04
Posts: 21,407
Loc: Building 7
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: Stonehenge]
#21881631 - 07/01/15 04:50 AM (8 years, 6 months ago) |
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Quote:
Stonehenge said: Yeah, pr is having problems too. Is there any country that isn't? Its not a usa state, btw.
Greece is hammering the stock market, many other actors are warming up in the wings to sing the same song. How much longer can the present system keep going before it falls down? I mean world wide. If there is a collapse even the strong countries will be hurt badly.
BUT, expect PR to become the 51st state in 2016. You heard it here first.
-------------------- Anxiety is what you make it.
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Rebelutionsssss
Mdmazing



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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: LunarEclipse]
#21881671 - 07/01/15 05:15 AM (8 years, 6 months ago) |
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Hookers and cocaine have reached an all time bargin low that even the poorest man can afford
-------------------- : To define is to confine.
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hostileuniverse
Stranger



Registered: 05/14/15
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: LunarEclipse]
#21902318 - 07/05/15 06:56 PM (8 years, 6 months ago) |
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Quote:
BUT, expect PR to become the 51st state in 2016. You heard it here first.
not likely, they'll need us to bail them out, but they won't want to give up what sovereignty they have by becoming a state...
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Adden

Registered: 06/04/03
Posts: 39,201
Loc:
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: hostileuniverse]
#21902887 - 07/05/15 09:13 PM (8 years, 6 months ago) |
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That's what we need. Another bailout; and adding insult to injury, it's not our problem.
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chopstick
nobody



Registered: 07/26/08
Posts: 5,081
Loc: Chin's Wok
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Re: Report Gives Damning Review Of Puerto Rico's Finances [Re: Adden]
#21910450 - 07/07/15 04:27 PM (8 years, 6 months ago) |
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Yet another country that the IMF has locked into a system of unsustainable debt. How many of them are there now? Dozens? It sure pays to own a printing press.
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