Puerto Rico governor declares payment moratorium

SAN JUAN — Puerto Rico Gov. Alejandro Garcia Padilla has expanded an emergency debt moratorium that he said would protect the government's ability to provide essential services amid a worsening economic outlook.

The governor late Friday signed an executive order that halts notes payments by the Puerto Rico Infrastructure Financing Authority. He said the move was necessary to "ensure the public health, safety, education and well-being" of island residents.

The governor enacted a moratorium on other financing authority debt in April and has declared fiscal emergencies at the Government Development Bank and Puerto Rico Highway and Transportation Authority.

Puerto Rico creditors are challenging through three separate lawsuits a law that grants the governor the power to declare debt payment moratoriums.

The most recent challenge was filed by a group of general obligation bondholders in New York federal court on Tuesday after the territory announced the collapse of debt talks with a group of senior creditors.

During a forum in Washington, D.C. on Thursday, the governor reiterated that Puerto Rico lacked the money to cover nearly $2 billion in bond payments that come due July 1 and would have to default.

Garcia on Friday urged the US Senate to approve a pending bill that he says would create a legal mechanism for Puerto Rico to restructure the territory's nearly $70 billion debt. The legislation known as PROMESA would also create a federal oversight board to ensure the commonwealth government begins operating with balanced budgets.