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Experts offer some praise for Puerto Rico bill in Congress

Pedestrians walk past a store that is under liquidation in the Rio Piedras neighborhood in San Juan, Puerto Rico.
Erika P. Rodriguez | Bloomberg | Getty Images

Experts cautiously praised the current bill under consideration by Congress to alleviate the financial crisis facing Puerto Rico.

"It is the only viable path for Puerto Rico to re-establish budget credibility and it is the only viable path to provide the necessary legal tools to carry out the debt restructuring," Brad Setser, a senior fellow at the Council on Foreign Relations, said Wednesday at a panel hosted by the conservative American Enterprise Institute.

On May 2, Puerto Rico registered its largest default to date when it failed to make a $367 million payment on bonds issued by the Government Development Bank, and looming ahead is a nearly $2 billion payment due July 1. Congress is currently with bipartisan support that would establish a board to oversee the territory's fiscal planning and create a process for debt restructuring.

Desmond Lachman, a former deputy director of the International Monetary Fund currently affiliated with AEI, said he thought the oversight board would produce greater transparency and better budget planning. John Miller, co-head of fixed income at Nuveen Asset Management, said that the proposed bill "has been a stabilizing factor on Puerto Rico bonds broadly and has not impeded the broader municipal market either."

However, some panelists said more was needed aside from the current bill pending in Congress. "If you just do what is in [the current bill], we really aren't going to get growth there," Lachman said.