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Persistent deficits and unsustainable borrowing left Puerto Rico’s government without sufficient funds to pay its debts, honor its pension obligations to public workers, and adequately fund crucial public services. The government was inefficient, and it was just clear that everybody, across the board, had to sacrifice to get things back on track.”īy the time the Commonwealth of Puerto Rico filed for bankruptcy in 2017, the island was struggling under a complex web of US$70 billion in debt issued by more than a dozen government entities and had virtually no money set aside to fund its US$55 billion pension liability.Ī combination of complex factors over many decades - changes to the federal tax code, international trade agreements, the global financial crisis, and the loss of Puerto Rico’s financial competitiveness in critical sectors - diminished the island’s prospects for economic growth and led to structural shortfalls that evolved into a fiscal and economic crisis. “It was clear that Puerto Rico was in deep financial distress,” says David Skeel, Chairman of the Oversight Board appointed to help the Commonwealth get back on track.