Republicans help Puerto Rico

The measures show the increasing pressure on lawmakers who control Congress to intervene

Republicans in the US Congress proposed their first measures to help Puerto Rico as it swiftly runs out of cash, responding to pleas from the island’s government and the Obama administration.

Senate committee chairs including Orrin Hatch, the head of the finance panel, filed a bill Wednesday to direct up to $3 billion (Dh11 billion) to Puerto Rico through a new authority that would oversee the island’s budget and could borrow on its behalf. Representative Sean Duffy, who sits on the House Financial Services committee, also introduced legislation to give Puerto Rico agencies the ability to file for municipal bankruptcy, a provision that’s absent in the Senate bill.

“Congress decided to move,” said Phil Fischer, head of municipal research at Bank of America Merrill Lynch in New York. “The humanitarian situation in Puerto Rico is deteriorating fairly rapidly. Infrastructure Financing Authority said in a filing Wednesday that it will have to use reserves to pay its bondholders next month because the government has been redirecting its funds.

The escalating crisis has triggered a decline in the price of Puerto Rico bonds, which are held by many Americans because they’re tax-exempt nationwide. Puerto Rico general obligations maturing July 2035, which were first sold for 93 cents on the dollar in March 2014, traded Wednesday for as much as 75 cents, little changed from Tuesday.

Garcia Padilla, speaking to reporters in Washington before the legislation was introduced, said he would be open to allowing federal oversight of the government’s fin-ances as long the step respects its political autonomy.

The Senate bill would create a federal authority to direct the aid to Puerto Rico, which would be drawn from money left over from the federal health care law. It would have the ability to issue debt, though “the full faith and credit of the US” wouldn’t back the obligations it issues, according to a summary of the measure.