A US law passed to address Puerto Rico’s debt crisis could apply retroactively to the US Virgin Islands, another heavily indebted US territory. The US Virgin Islands has higher debt-per-person levels than Puerto Rico and ratings agencies downgraded its debt to “junk” status in December. The Puerto Rico Oversight, Management and Economic Stability Act became law in June and includes language allowing the government of the US Virgin Islands to opt into the law.
“People in the Virgin Islands are facing some of the same challenges that the people of Puerto Rico face,” noted Eric LeCompte, executive director of the religious development coalition Jubilee USA. LeCompte testified to Congress and to Puerto Rico’s oversight board on Puerto Rico’s debt crisis. “What happens over the next few months with Puerto Rico will impact how other US territories deal with financial crisis.”
Virgin Islands officials opposed last summer’s Puerto Rico debt crisis legislation for fear that it could make it more difficult for the territory to borrow money. The territory has just over 100,000 residents compared to Puerto Rico’s 3.5 million but owes $2.4 billion in debt, or $23,000 per person.
Territory officials want Congress to amend federal law to treat territories and states equally on tax and health care issues. The Puerto Rico legislation created a Congressional task force to examine those issues. The task force released a report in December recommending that Congress pass many of those changes.
“There are some immediate steps Congress can take to help the Virgin Islands,” stated LeCompte, who serves on United Nations expert groups on debt and finance. “Ultimately, the Virgin Islands will need to restructure its debt.”
Read more about Puerto Rico debt crisis legislation
Read more about the Congressional Task Force on Puerto Rico’s December 2016 report
Read more about Puerto Rico’s debt restructuring process