Despite speculations that Puerto Rico would end up defaulting again, the U.S. territory was able to make a $355 million payment for its bond debt on Tuesday. They payment, which was due the day it was paid, saved the country from another default, though officials remain very cautious about the country's financial future, according to Yahoo! News.
Had the U.S. territory failed to meet the deadline on Tuesday, its effects would have been more significant than last August's default since part of the debt was protected by the commonwealth's constitution. Hence, another default could have triggered lawsuits, scared off investors once more and undermined Puerto Rico's efforts to climb out of its $72 billion debt.
Melba Acosta Febo, president of the Government Development Bank for Puerto Rico, stated that by making the deadline, the island nation was able to meet its commitments to honor its obligations. By doing so, however, the government will have to pay for essential government services by using money that has already been set aside for future debt payments, reports KPBS News.
"Today's debt service payments reflect our commitment to honor our obligations notwithstanding the extreme fiscal challenges we face in an effort to facilitate a voluntary restructuring process with our creditors," she said. "However, make no mistake, Puerto Rico's liquidity position is severely constrained at this time despite the extraordinary measures the Government has taken to improve it."
Despite the brief reprieve, the U.S. territory is still financially in dire straits.
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