Martin Teschner / CC BY-ND 2.0

Billionaire hedge fund managers have demanded that Puerto Rico lay off teachers, close schools, raise taxes, sell billions of dollars worth of public buildings and drastically cut public spending in order to repay loans and avoid financial default.

The Guardian reports:

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, 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 enrollment had declined by about 25% as hundreds of thousands of families fled to the US mainland in an effort to escape poverty. …

Fajgenbaum told the Guardian that the Puerto Rico government had been “massively overspending on education”. He said spending had increased by 39% to $4.8bn over the last decade while attendance had fallen from more than 765,000 to 573,000. …

Puerto Rico’s current education spending works out at $8,400 per student, below the US national average of $10,667.

Read more here.

— Posted by Alexander Reed Kelly.

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