Puerto Rico Governor Alejandro García Padilla predicted that the island would default in January or May of next year if Congress does not help.
“There’s no money. I have no printing machine. There’s no money and the Constitution guarantees the people of Puerto Rico to provide essential services and I have no money to provide essential services and to pay the creditors, and they [Congress] need to understand that,” he said at the National Press Club.
“The time will come very soon, and it will probably be on January 1, and I am trying to avoid it but it will probably be on January 1 that I will not have money to do both things. And if they make me choose between Puerto Ricans and creditors, I will choose Puerto Ricans, always. There’s no question about it,” he added.
Padilla, who is seeking bankruptcy authority from Congress, said he is not asking for a bailout but wants the tools to restructure Puerto Rico’s debt.
“If they don’t act it will be more expensive, and the ball will remain in their court. I was asking them to send the ball to my court – to give me the tools. It’s the Puerto Ricans’ issue and we want to solve it but we need the tools. I was asking for the tools,” he said. “Today the ball is in Congress’ court.”
The government owes $957 million on January 1 and the total debt is currently $70 billion. When Puerto Rico defaults, Padilla said he will be sued and the government will likely close.
“I will not have money to pay essential services like security, like providing healthcare, and what will that provoke, that our economy goes to the bottom again? If our economy goes to the bottom again, what will happen? Next month I will have less money to collect,” he said. “If I have less money to collect I will have less money to provide services and pay creditors.”
Padilla, who is not seeking re-election, explained that he realized during his transition into office that the island’s deficit was much higher than he anticipated. Padilla said he could not request a recount after the 2012 election since he was the winner.
“In Puerto Rico the law does not allow the winner to ask for a recount,” he said to laughter from the crowd.
Padilla said he has made budget cuts but cannot fire people because it will hurt the economy further.
“I will get to that death spiral, and that will be choosing them [creditors] against Puerto Ricans and I will not do that,” he said. “We are about to get into a humanitarian crisis. Just compare it to an atmospheric disaster in Puerto Rico. Just compare it to that.”
Padilla told the audience he regrets not challenging Congress and the creditors earlier.
“I think that’s the main thing I regret,” he said.