World Economy

Puerto Rico Seeking Cash to Make GDB Payment

Puerto Rico Seeking Cash to Make GDB PaymentPuerto Rico Seeking Cash to Make GDB Payment

Puerto Rico is working on ways to increase liquidity at its Government Development Bank to make a debt service payment due Aug. 1, the governor’s chief of staff said.

The GDB, which has reported dwindling cash reserves, faces $169.6 million in debt service on notes on Aug. 1, Reuters reported.

“We are taking steps to provide liquidity to the bank so it can meet these payments,” said Chief of Staff Victor Suarez.

GDB president Melba Acosta has informed the government the initiatives are in a very advanced stage but need to be finalized, he said.

The GDB has reported that liquidity fell to $777.9 million as of May 31, down 24% from $1.02 billion at the end of the previous month.

Puerto Rico’s Governor Alejandro Garcia Padilla dropped a bombshell on creditors in June by saying the island needed to restructure debts to solve its fiscal problems, while an adviser to the island said the US territory would soon run out of cash.

Suarez reiterated that the commonwealth does not have the current cash to make a separate payment due from its Public Finance Corporation that is also scheduled for Aug. 1.

Its Public Finance Corporation disclosed in a filing earlier in July that it failed to transfer $93.7 million in funds to pay the principal and interest on its bonds.

Default to bondholders on the Aug. 1 payment will occur unless the legislature reconvenes and approves a payment, director of credit analysis at HJ Sims, Richard Larkin, said in a research note last week.