SAN JUAN, Puerto Rico -- The government of Puerto Rico confirmed Monday that it failed to make a $58 million debt payment, a significant escalation of the debt crisis facing the U.S. island territory.
Puerto Rico made a partial payment of $628,000 in interest but could not afford to make the remainder, which was due Saturday, because the Legislature did not appropriate the funds, said Melba Acosta Febo, president of the Government Development Bank.
The government warned Friday that it would not make the payment and argued that it should not be considered a default under a technical definition of the term, an argument rejected by Moody's Investors Service and others.
"This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments," said Emily Raimes, a vice president at Moody's.
"This is a first in what we believe will be broad defaults on commonwealth debt."
Gov. Alejandro Garcia Padilla warned in July that the government and state agencies could not repay the $72 billion in public debt that hangs over the U.S. territory, which is struggling with a nearly decade-long economic slump.
Puerto Rico's economy has struggled to grow since 2006.
Its population has shrunk by 7 percent in the past decade as residents look for work on the U.S. mainland, and its 12.6 percent June unemployment rate is more than double the U.S. average.
Garcia's administration has pushed for the right for Puerto Rican public agencies to file for bankruptcy under Chapter 9, which officials say would allow an orderly restructuring of the debt, but the proposal has not drawn any Republican co-sponsors in the U.S. Congress.
The White House has said that no federal bailout is planned.
In New York, Washington and Orlando, Fla., demonstrators on Monday called for the U.S. government to help the struggling territory.
In New York City, home to more than 700,000 Puerto Ricans, the largest concentration outside the territory, Mayor Bill de Blasio joined other elected officials and labor leaders on the steps of City Hall to blame investors and federal policies for creating the commonwealth's problems.
"It is very disheartening that the U.S. government is turning a blind eye toward the grave situation in Puerto Rico," said City Council Speaker Melissa Mark-Viverito, 46, a Democrat from East Harlem who was born in San Juan.
Hedge funds, she said, "are vultures, are feeding off the misery of the island and the people, and it's really dire."
The path out of the crisis, de Blasio said, lies in the U.S. Creditors should relax the debt-repayment schedule and the federal government should allow Puerto Rican agencies to file for bankruptcy, he said.
The government should also help companies and individuals invest in the island. The Jones Act, a federal law with costly shipping restrictions, should be amended to exempt Puerto Rico, he said.
"They are saddled with a debt they cannot pay," de Blasio said.
"They are at the mercy of their creditors."
In Washington, Democratic Representatives Jose Serrano and Nydia Velazquez of New York called for Congress to permit commonwealth agencies to file for bankruptcy. As the crisis deepens, "Wall Street will eventually feel it," Serrano said.
The events were organized by the National Hispanic Leadership Agenda, a coalition of 39 Hispanic organizations, and included a rally in Orlando.
Information for this article was contributed by staff member of The Associated Press and by Henry Goldman, Michelle Kaske and Kasia Klimasinska of Bloomberg News.
A Section on 08/04/2015