Puerto Rico is now facing a $16 billion financing gap over the next five years, up from the $14 billion originally projected in September, commonwealth officials said Monday.
Top officials released a revised recovery plan that shows the debt burden is even greater than previously indicated.
The recovery plan, originally unveiled in September by a committee appointed by the governor shortly after he declared in June that the island's debt was not payable, was adjusted from a 5-year to a 10-year time frame. The move came after Puerto Rico's Treasury recently reported a reduction in revenue projections as the island's financial situation continues to decline.
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In a call with reporters shortly before the modified plan was released publicly, senior Puerto Rican officials said that a substantial debt restructuring is required in order to bring the commonwealth's finances into balance.
Absent this measure, the U.S. territory faced a financing gap of approximately $16 billion over the next five years. When the model is extended out to a 10-year period that fiscal gap balloons to $24 billion, without debt relief.
In addition, senior officials also warned of the possibility of widespread defaults occurring in June if the commonwealth is unable to come to terms with its creditors on a restructuring plan for its nearly $70 billion in outstanding debt.
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The officials confirmed they plan to continue to use the clawback mechanism used to help fund the January general obligation debt-service payment.
A recent lawsuit filed by two of the island's top insurers, Ambac Financial Group and Assured Guaranty — which collectively insure or reinsure approximately $8B of the island's debt — asserts that the move was unconstitutional and seeks to prevent any additional clawbacks from taking place.
Correction: This article has been updated to reflect Puerto Rico's total debt burden.