Hedge funds tell Puerto Rico: lay off teachers and close schools to pay us back
Billionaire hedge fund managers have called on Puerto Rico to lay off teachers and close schools so that the island can pay them back the billions it owes.
The hedge funds called for Puerto Rico to avoid financial default – and repay its debts – by collecting more taxes, selling $4bn worth of public buildings and drastically cutting public spending, particularly on education.
The group of 34 hedge funds hired former International Monetary Fund (IMF) economists to come up with a solution to Puerto Rico’s debt crisis after the island’s governor declared its $72bn debt “unpayable” – paving the way for bankruptcy.
The funds are “distressed debt” specialists, also known as vulture funds, and several have also sought to make money out of crises in Greece and Argentina, the collapse of Lehman Brothers and the near collapse of Co-op Bank in the UK.
The report, entitled For Puerto Rico, There is a Better Way, said Puerto Rico could save itself from default if it improves tax collection and drastically cuts back on public spending.
It accused the island, where 56% of children live in poverty, of spending too much on education even though the government has already closed down almost 100 schools so far this year.
The report, by Jose Fajgenbaum, Jorge Guzmán and Claudio Loser – all former IMF economists who now work for Centennial Group, said Puerto Rico had increased education spending by $1.4bn over the past decade while enrolment had declined by about 25% as hundreds of thousands of families fled to the US Hedge funds tell Puerto Rico: lay off teachers and close schools to pay us back | World news | The Guardian: