Implications of a Disorderly Default

Economics and urban planning expert Deepak Lamba-Nieves, along with colleagues at the San-Juan-based Center for a New Economy (CNE), have released a set of papers analyzing the Puerto Rican debt crisis.

Congress is weighing whether or not to give Puerto Rico bankruptcy rights to avoid a disorderly default on January 1, when $900 million of its $72 million debt comes due. Bankruptcy rights are available to cities in U.S. states, but not to municipal entities in U.S. territories.

“In our opinion,” the researchers write, “Puerto Rico’s most urgent need at this moment is a legal framework to restructure its debt in a fair and orderly manner under the supervision of a federal bankruptcy court.”

For the past decade, Puerto Rico has faced job loss, high unemployment, and significant outmigration.

Lamba-Nieves is a postdoctoral fellow at Watson and the Churchill G. Carey Jr. Chair in Economic Development Research at the CNE, a non-partisan think-tank that produces independent research and policy on issues of economic development.

Get the full analysis here.