In a move that has shocked Wall Street and Washington, the Puerto Rican Senate and the House of Representatives have passed an emergency declaration authorising the governor to suspend payments on US$72 billion in public debt, Democracy Now! said on April 6.
This sets up dramatic showdown between the United States colony and hedge funds amid the Caribbean island's historic debt crisis.
The bill authorises the Puerto Rican governor to “protect the health, security and public welfare ... [by] using government funds first and foremost for public services”.
The dramatic move comes one day after a group of hedge funds sued to freeze the assets of Puerto Rico's Government Development Bank. Democracy Now! said the hedge funds were seeking to stop the bank from spending money on the island that the hedge funds want to go toward upcoming debt payments.
The move comes as Puerto Rican college students have waged a series of demonstrations to protest austerity measures they say endanger the higher education system, Democracy Now! said.
On April 5, students at the University of Puerto Rico campus in Bayamon voted to start an indefinite strike, while students at the Ponce campus voted to begin a 72-hour strike. Students at the University of Puerto Rico at Utuado have also shut down the campus.
In March, students held a protest outside the Puerto Rican Treasury. A protester told Democracy Now!: “The governor has always said that the people are first and the bondholders last. He should stop lying, because in May and June he needs to make two bond payments.
“We know that the government of Puerto Rico will pay the bondholders first, and they don't care about the University of Puerto Rico.”