Life After Debt in Puerto Rico: How Many More Lost Decades?

As Puerto Rico enters the legal debt restructuring process, this paper examines the future prospects for an economy that has had no growth over the last ten years — a lost decade. The facts indicate that the fiscal plan approved by Puerto Rico's Financial Oversight Board will not lead to an economic recovery in the foreseeable future and that another lost decade, or worse, is a much more likely outcome. Nor will the proposed restructuring satisfy creditors, who may then further impede economic recovery by taking legal action in an attempt to collect the full value of the bonds they hold. The paper also notes the recent historical and structural causes of the economy's decline, which led to the debt crisis; and that these, too, will need to be addressed if Puerto Rico is ever to have a sustainable recovery