Bonds News

Religious leaders in Puerto Rico condemn austerity, ask Fed for help

NEW YORK, Aug 31 (Reuters) - Religious leaders in Puerto Rico called on Monday for the island’s government and its lenders to avoid austerity measures and for the Federal Reserve to step in with assistance.

The religious leaders on the mostly Catholic island, working with Jubilee USA Network, a religious development organization in Washington, D.C., want a solution to Puerto Rico’s debt crisis that invests in the island’s economy, does not hurt the poor and brings about more budget transparency, according to a statement.

Puerto Rico is working to restructure $72 billion in debt, and is considering reducing expenses through measures such as cuts to healthcare and consolidating and closing schools. A working group had been slated to deliver a so-called debt adjustment plan on Sunday or Monday, but will hold off until as late as Sept. 8.

Unlike U.S. states, Puerto Rico does not have access to U.S. bankruptcy laws. The religious leaders support changing that through a measure that has been introduced in the U.S. House and Senate. But, if Congress does not act, the leaders want the Federal Reserve to intervene and help restructure the island’s debt, according to the statement.

“We have been looking at the powers the Federal Reserve has and the tool box the Federal Reserve has,” said Eric LeCompte, the executive director of Jubilee.

A report completed by a foundation on the island, cited by LeCompte, lays out how the Fed may be able to help Puerto Rico, including by buying Puerto Rico debt and offering financial planning assistance.

The New York Fed, which represents the island in the Federal Reserve System, has released two reports on the island’s economy, which has been at or near recession for close to a decade. A call to a spokesperson at the New York Fed was not immediately returned.

“This debt crisis threatens to push more of our people into poverty and put people out of work,” said San Juan Archbishop Roberto Gonzalez Nieves, leader of Puerto Rico’s mostly Catholic population. “The religious community stands with vulnerable people and we call for the crisis to be resolved in a way that protects the poor and grows our economy.” (Reporting by Jessica DiNapoli, editing by Dave Gregorio)