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Op-ed Placement

Forgiving Debt Would Hurt Puerto Rico

Originally Published in Wall Street Journal on 10/11/17.

Estimates vary about the cost and time required to rebuild Puerto Rico after Hurricane Maria. And the territory’s excessive debt burden will only make the recovery more complicated.

Before the hurricane, Puerto Rico’s finances were in a sorry state. The government was already uncertain of how the territory would pay back excessive debt, and it was expected that Puerto Rico’s creditors were going to suffer some kind of “haircut.” Now it’s looking even worse.

President Trump suggested during his visit last week that erasing the Puerto Rican government’s debt would free up scarce dollars to pay for the island’s reconstruction. But this isn’t the answer. Wiping out Puerto Rico’s debt would do a disservice to the territory’s creditors, many of whom are Americans. More important, it would hurt the Puerto Rican people by delaying the real, long-term recovery the territory needs.