SAN JUAN, Puerto Rico — Gov. Alejandro Garcia Padilla announced that Puerto Rico’s government will not make a $370 million bond payment due today, after a failure to negotiate a legal or political solution to the U.S. territory’s public debt crisis.
Garcia said Sunday that he had issued an executive order suspending payments on debt owed by the island’s Government Development Bank, a default that economists warn could prompt lawsuits from creditors and hurt future access to capital markets.
Island officials spent the weekend trying to negotiate a settlement that would have avoided the default but apparently came up short.
“Let me be very clear, this was a painful decision,” Garcia said in a speech. “We would have preferred to have had a legal framework to restructure our debts in an orderly manner.”
He said Puerto Rico’s government could not make the payment without sacrificing basic necessities for the island’s 3.5 million residents, including keeping schools and public hospitals open.