Congress must act on Puerto Rico’s debt

Puerto Rico’s governor has bluntly declared that the commonwealth’s $72 billion debt is unpayable. The issue now is how to come up with a credible plan to put the island’s finances and economy on sound footing.

A new report commissioned by Gov. Alejandro García Padilla makes clear that Puerto Rico is not generating enough revenue to provide public services and repay its debts. And even big spending cuts and tax increases will not fix that fundamental problem, according to the report issued by three former Interna- tional Monetary Fund and World Bank officials.

Mr. García Padilla says he is prepared to make sacrifices, including cutting more spending; since 2009, government employment on the island has fallen by about 70,000, to 230,000. But he wants the commonwealth’s lenders, which include mutual funds, hedge funds and other investors, to reduce the principal owed on some loans and allow more time to pay back other debts.

This plan can work only if Congress acts.