White House seeks $4.9 billion loan to ease cash crisis in Puerto Rico

The loan would be used to address Puerto Rico’s dire liquidity problems in the face of its $72 billion debt and the virtual shutdown of all business activities there since it was devastated by Hurricane Maria.

A White House official told the Washington Examiner that the request is for a community disaster loan, and said the money could be used for any area of the island affected by hurricane damage. It’s aimed at helping Puerto Rico out of its cash flow problems, and could not be used to service the tens of billions of dollars in debt the territory owes.

Puerto Rico Gov. Ricardo Rossello warned Monday that the lack of funds in the government was putting the territory “on the brink of a massive liquidity crisis that will intensify in the immediate future.”

The island’s treasury secretary confirmed to the Washington Examiner on Tuesday that it is still on track to run out of cash by the end of this month.

“We will run out of cash as of Oct. 31 of this year,” said Raul Maldonado, the territory’s treasury secretary. “As of November, we will not be able to operate as a normal government.”

He said the island needs between $4 billion and $6 billion in cash to alleviate its cash liquidity deficit through the end of December.

It’s not clear how or how quickly Congress will be able to authorize a loan to Puerto Rico, which could end up being a permanent transfer of money, given Puerto Rico’s outsized debt.

The House has already passed a $29 billion disaster relief bill, which is now in the Senate, except the Senate is out this week. It’s possible that more funding or a loan authorization could be added to the bill that could clear Congress this week or next, but there were no firm plans to do so as of Tuesday.

Rossello estimated the storm left behind $95 billion in damages, which is equal to about 150 percent of the island’s gross national product.