The only thing Chapter 9 would do is allow Puerto Rico's leaders to kick the can yet again, avoiding the policy and structural changes needed to improve and sustain long-term growth. With Chapter 9, we won't see substantive reforms from the Commonwealth government, and Puerto Rico's residents will be worse off.
If the Puerto Rican government were serious about improving the island's financial situation, there are a number of steps it could take today that would begin to address the island's liquidity constraints and send a positive signal to creditors and the federal government.
For example, Puerto Rico's leaders could privatize, through existing laws, certain public corporations that would otherwise be private on the mainland. It could use public-private partnerships (P3s) to build upon successful P3s implemented between 2010-2012. This would eliminate debt, pension liabilities and shift government expenditures to efficient private sector operators. Additionally, the government could implement procurement reform legislation that has been in place since 2011, saving hundreds of millions through necessary efficiencies. It also could change its very slow and bureaucratic permitting process via executive order, a step that would credibly and quickly reduce costs and encourage investment and growth.