The governor of Puerto Rico, Ricardo Rossello, announced Wednesday that he would move the effort to solve the island's debt crisis to federal Bankruptcy Court.
Rossello's decision came after extensive negotiations with creditors stalled, resulting in the creditors suing the government over defaults on the debt.
"Given the deficit that we have inherited, it is my responsibility to guarantee the best interests of the Puerto Rican people," Rossello said at a news conference. "We are here to address the problems of Puerto Rico, not to look at the past, and I am convinced that our island will be able to resume the path of economic development with the correct steps of the government and the commitment of each one of its residents."
In the midst of Puerto Rico's financial calamity, Rossello, a scientist and the son of a former governor of the island, has been advocating for Puerto Rico to gain statehood as a means to help it dig out from $70 billion in public debt.
A referendum for statehood is planned for June 11.
Unlike the 50 states, Puerto Rico is not allowed to restructure its debt under Chapter 9 bankruptcy protection because it is a U.S. territory.
The island will petition for financial relief under a federal law that was passed last July under the Obama administration called Promesa, which includes an oversight board that would help the island manage its public finances.
By invoking Title III of Promesa, Rossello asked for an in-court debt restructuring process.
In addition to the island's financial woes, Puerto Rico faces a brain drain problem, high unemployment and an aging population that has placed a strain on the economy.
Many of the island's doctors and business professionals have left and the unemployment rate hovers at 11.5 percent, which is lower than its long-term average of 15.1 percent, according to the Bureau of Labor Statistics.
Another concern is Puerto Rico's Medicaid program. If it runs out of funds it could result in 900,000 residents losing health care by the end of the year.
