Justin Vélez-Hagan, Public Policy, in Forbes

Puerto Rico currently has a per capita debt load of $19,000 and its 2013 deficit was around $2.2 billion.  In the midst of a prolonged recession, there has been widespread debate on how to solve the debt crisis.

Justin Vélez-Hagan, Public Policy Ph.D. student and executive director of The National Puerto Rican Chamber of Commerce, co-authored an article published in Forbes that suggested bankruptcy might be the only solution to reforming the economy.

“Puerto Rico has to restructure. They can’t keep borrowing at 8 and 9%, raising taxes on the only ones paying any, and chasing away its brightest contributors to the relative economic paradise of the mainland,” Vélez-Hagan wrote. “Bondholders have already taken a big hit and are going to take a long, slow and inevitable bigger one if they don’t restructure now.”

Vélez-Hagan also argued that Puerto Rico must change its economic attitude and way of thinking to rebound, especially with an unemployment rate currently at 13.9%.

“Even if there is a bankruptcy, and even if bondholders get 30 or 40 or 60 cents on the dollar and even if pension obligations are reduced 30 or 40 percent, Puerto Rico must undergo an economic structural reform and create a competitive economy that incentivizes new business and creates an atmosphere that that makes it more profitable to work than to be on the dole,” Vélez-Hagan wrote.

Contributing writer Richard Finger co-wrote the article with Vélez-Hagan. To read the full article “Default: Puerto Rico’s Inevitable Option” in Forbes, click here.