Lew: Congress missed 'crucial' chance to help Puerto Rico

Puerto Rico has several times failed to make payments towards its $70 billion debt, including a $2 billion instalment in July (AFP Photo/PAUL J. RICHARDS)

Washington (AFP) - US President Barack Obama's administration slammed Congress for passing a fiscal 2016 spending bill Friday that lacked assistance to Puerto Rico, as the US territory battles a debt crisis.

"Congress missed a crucial opportunity to provide Puerto Rico with meaningful tools to address its fiscal crisis," Treasury Secretary Jacob Lew said in a statement.

"The administration has been clear that the situation in Puerto Rico is urgent."

The Caribbean island is saddled with unpayable debts of over $70 billion. Earlier in December the governor of Puerto Rico, Alejandro Garcia Padilla, asked the US Congress to pass a law that will allow Puerto Rico to declare bankruptcy.

The Obama administration has repeatedly said it will not bail out Puerto Rico, but it has strongly supported bankruptcy legislation to allow an orderly debt restructuring under court supervision.

"Providing restructuring authority to the people of Puerto Rico will require Congress to confront difficult interests and tough issues, but it is essential to protect the 3.5 million Americans who live in the commonwealth. The administration remains committed to working with Congress to address this crisis," Lew said.

Puerto Rico was able to accumulate a massive amount of debt due to US laws that made the debt tax-free for investors who were promised that the island could never default.

Despite the inflow of funds in the 2000s, the Puerto Rican economy sank into recession and has not recovered for a decade.

Over the past two years the government has slashed spending and moved to restructure some of its finances, but that has not stabilized the situation.

More than 300,000 people have moved to the US mainland for jobs, further weakening the economy.