Puerto Rican Gov. Alejandro Garcia Padilla said the island avoided default a $355 million debt payment to creditors Tuesday. File photo by the U.S. Department of Labor

WASHINGTON, Dec. 1 (UPI) -- A U.S. senator on Tuesday said Puerto Rico avoided default on a $355 million debt payment to creditors.

USA Today quoted Sen. Richard Blumenthal, D-Conn., speaking at a Senate Judiciary Committee hearing on the island's fiscal crisis, as saying it required "financial gymnastics" for the San Juan government to meet a Tuesday deadline to pay one of several allotments of debt owed to creditors.


Puerto Rico Gov. Alejandro García Padilla earlier this year said it was not possible for his country to pay off its $72 billion debt.

Testifying at the hearing Tuesday, he said government efforts over the past 10 years to reduce spending, raise taxes and lay off tens of thousands of government employees has only added to the island's economic woes. More than 300,000 Puerto Ricans moved to the U.S. mainland in that time, further shrinking tax revenues.

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Puerto Rico first defaulted on a payment in August, when a fraction of a $58 million allotment was paid to creditors with the island's Government Development Bank.

Blumenthal did not elaborate on how much would be paid on Tuesday nor what sort of arrangement was met with creditors.

The Wall Street Journal reported the Tuesday payment -- which would keep negotiations with creditors from collapsing -- was weighed against millions of dollars of holiday bonuses owed to Puerto Rico's government workers.

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The Tuesday payment also fell under a category of debt that must be paid according to the island's constitution, USA Today reported.

Padilla on Tuesday said the economic problems facing Puerto Rico were insurmountable without Chapter 9 bankruptcy protections -- which are currently offered to U.S. municipalities but not the island nation.

According to the Administrative Office of the U.S. Courts, Chapter 9 bankruptcy provides "a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts."

The Obama administration in October asked Congress to pass legislation allowing Puerto Rico to restructure its debt, including through access to bankruptcy protections.

Puerto Rico's next payment deadline is Jan. 1, when $1 billion is due to various creditors.

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