The US Senate has passed a bill to help Puerto Rico tackle its $70bn debt – just two days before the island territory is set for a possible default.
The measure passed the Senate on a vote of 68-30 on Wednesday evening and President Barack Obama said in a statement he looked forward to signing the bill into law. The House of Representatives had already approved the bill.
“This bill is not perfect, but it is a critical first step toward economic recovery and restored hope for millions of Americans who call Puerto Rico home,” Mr Obama said.
The legislation would create a federal oversight board, appointed by Washington, with power to restructure Puerto Rico’s unmanageable debt load, said Reuters.
The bill provides for a stay, or halt, to any litigation brought against the Puerto Rican government and its debt issuing agencies that is retroactive to December. This provides breathing room for the board to start the process of restructuring and oversee a sustainable budget process.
On Friday, Puerto Rico faces a potential default on a chunk of its debt if it cannot make $1.9bn worth of payments. Puerto Rico’s Governor, Alejandro Garcia Padilla, has said the island will default some of the debt.
Puerto Rico has been waiting for months for Congress to act as its economic crisis worsened. It has already defaulted on some of its debt. The Caribbean island territory is reeling from a 45 per cent poverty rate, as well as a steady flow of migration to the US mainland that shrinks its tax base and shuttering of essential services.
In addition, it is suffering from a Zika virus outbreak that is hurting its critical tourism industry.