Puerto Rico Gov. Alejandro Garcia Padilla said the U.S. territory will not need a bailout or need to file for bankruptcy, despite the government's bank announcement that it was cutting bond sales for the rest of the year.
Garcia said that even though the island is in its eighth year of recession that it would not default on its debts, according to The Associated Press.
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"We will do everything, and I repeat, everything that is necessary for Puerto Rico to honor all its commitments," Garcia said Tuesday. "It's not only a constitutional but also a moral obligation."
Puerto Rico's Government Development Bank announced it would cut bond sales between $500 million and $1.2 billion for the rest of 2013, after investors pushed the yield on Puerto Rico bonds above 10 percent.
Puerto Rico government bonds are popular in the United States because they are exempt from federal and state taxes.
Garcia said he plans to reform the island's pension system for teachers by year's end, according to The Associated Press. This comes after an overhaul of the public pension system earlier this year. The pension system faced a $37.3 billion unfunded liability.
Some say they are worried about Puerto Rico's economy.
"You cannot say that everything is pink and we are living in Disneyland, because that’s not true," Economist Sergio Marxuach told the Puerto Rico Report.
"People know in their daily lives that things are bad. A person who is a leader cannot make a speech that is socially unreal and then expect people to believe it, and obviously investors believe it even less because they see economic statistics."
The island's unemployment rate has jumped to 13.9 percent despite a drop in Puerto Rico's overall population.
"The unprecedented population decrease over the past dozen years has occurred as hundreds of thousands of Puerto Ricans have chosen statehood over the limits of territory status by moving to a state," the Puerto Rico Report wrote. "This mass migration demonstrates the interrelationship between Puerto Rico’s problems and the United States as a whole."
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