Puerto Rico 'Defaults' On $58m Debt Payment

Puerto Rico's government has confirmed that it failed to make a £37m ($58m) debt payment - as the US territory plunged further into a debt crisis.

Credit ratings agencies said the missed payment effectively amounted to a default, weeks after warnings that Puerto Rico could not repay £46bn ($72bn) in public debt that has built up during a decade-long economic slump.

The island made a partial payment of $628,000 interest but could not afford to pay the rest of a sum due on Saturday, the Government Development Bank president Melba Acosta Febo said.

Puerto Rico's government argues the missed payment should not be considered a default under a technical definition of the term - but the Moody's ratings agency and others have rejected the claim.

Moody's vice president Emily Raimes said: "This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments.

"This is a first in what we believe will be broad defaults on commonwealth debt."

Governor Alejandro Garcia Padilla's administration has pushed for Puerto Rico public agencies to have the right to file for bankruptcy, which it claims would pave the way for an orderly restructuring of the territory's debts.

But the proposal has not won any Republican backing in the US Congress, while the White House has said there are no plans for a federal bailout.

A report released by the World Bank last month found that Puerto Rico's public debt is much larger than originally thought.

It said tax collection projections had failed to materialise and added policy failures had hit the economy, which has been in a recession for nearly nine years.

But the report did praise action on higher taxes, pension reforms, spending cuts and freezes taken by Mr Padilla's administration.