The biggest bank in Puerto Rico cannot lend money and most withdrawals cannot take place after the island’s governor declared an emergency Saturday.
Puerto Rico Gov. Alejandro Garcia Padilla declared an emergency at the Government Development Bank that will keep money in the bank in hopes that it avoids defaulting on a May 1 default payment, Reuters reported. The Government Development Bank is the primary fiscal agent for the island territory.
Puerto Rico is facing a financial crisis. Many say it would be a disaster if the Government Development Bank defaulted on a $422 million payment on May 1.
Most withdrawals are now banned at the bank, with the exception of certain federal funds, payroll, police, fire, medical, education and disaster recovery operations.
The move came three days after Padilla signed a bill that allows him to declare a fiscal emergency and implement a temporary debt moratorium to prevent a shutdown of basic government service.
According to Reuters, the island faces about $70 billion in total debt and a 45 percent poverty rate.
Previously, Garcia Padilla has said the Government Development Bank would not be able to afford the May 1 payment. The bank and its creditors are currently negotiating so it can continue operating.
Puerto Rico is pushing Congress to authorize a debt-restructuring mechanism, but lawmakers have not agreed on a measure.
