(Inserts dropped word 'not' in second sentence of second
By Edward Krudy
NEW YORK Oct 7 Federal officials are expected
to announce incentives for economic development for Puerto Rico
in the next few months, a top legislator from the commonwealth
said on Monday, responding to investor concerns about the
island's rising debt costs.
But the help is not expected to include direct financial
aid, Puerto Rico Senate President Eduardo Bhatia told a
gathering of municipal securities analysts in New York. He did
not provide specifics about what any plan might consist of.
The assistance would come in response to the last four years
of recession in the Caribbean territory, Bhatia said. It has
been given added urgency due to the selloff in Puerto Rico's
debt over the last few months, he said.
The selloff in Puerto Rico's bonds has been driven by
worries about the territory's shrinking economy, and its jobless
rate and per capita debt which are far higher than that of any
Puerto Rico has about $70 billion of outstanding debt, or
nearly 2 percent of the overall $3.7 trillion municipal bond
Officials there have embarked on economic reforms intended
to show that the Caribbean territory will pay its debts, Bhatia
"The kind of reform you are making us do is very tough,"
Bhatia said. "But we are doing it because we want to send a
signal that we are honoring our debt."
Economic development officials and Puerto Rico Governor
Garcia Padilla have been in talks with the U.S. Treasury and
White House, he said.
A Treasury spokesperson told Reuters on Monday that they
were monitoring the situation but would not discuss where the
monitoring would lead.
"Given the potential for Puerto Rico's financial challenges
to impact United States markets, including the municipal market,
Treasury continues to closely monitor developments," said the
spokesperson, who did not want to be named.
A senior White House administration official said that
President Barack Obama's task force on Puerto Rico has been
"working for a number of years to maximize the impact of federal
resources on the island."
"As part of its ongoing work, the task force is coordinating
with federal agencies to strengthen Puerto Rico's fiscal
situation and economic outlook," the official said. "To that
end, the task force is working closely with Governor Garcia
Padilla's administration to make sure that federal resources are
fully utilized for maximum impact for the people of Puerto
(Reporting by Edward Krudy; Writing by Hilary Russ; Additional
Reporting by Lisa Lambert; Editing by Chris Reese, Tiziana
Barghini and Carol Bishopric)