US President Donald Trump asked Congress on Tuesday for a loan of $4.9 billion to help the cash-strapped government of Puerto Rico as it struggles to recover from Hurricane Maria.
Puerto Rico’s central government and various municipalities and other local governments are suffering unsustainable cash shortfalls as Maria has choked off revenues and strained resources.
The White House request came as the oversight board charged with resolving Puerto Rico’s debt crisis warned the US territory was at risk of being unable to pay for essential services such as salaries for teachers, first responders and healthcare providers.
“The best estimate of the Financial Oversight and Management Board (FOMB) and government is that the commonwealth will run out of money at the end of this month,” the board told US Treasury Secretary Steven Mnuchin in a letter on Tuesday evening.
Weighed down by nearly $72 billion in debt, Puerto Rico struggled with liquidity even before the most powerful hurricane in almost 90 years wiped out the island’s power grid, homes and other infrastructure nearly three weeks ago.
It will take months and billions of dollars to rebuild the grid, and the impacts of the storm have cratered the economy of Puerto Rico, home to 3.4 million American citizens, which declared bankruptcy in May.
Puerto Rico Governor Ricardo Rossello had warned two weeks ago that his government was in a bind and would need lines of credit.
Trump’s loan proposal was “an important first step for the transformation” of Puerto Rico, Rossello said on social network Twitter on Tuesday.