Puerto Rico's governor said that the island is unable to pay its approximately US$72 billion in debt, a statement likely to send waves through the US economy, The New York Times reported Sunday.
"The debt is not payable," Governor Alejandro Garcia Padilla told the paper. "There is no other option. I would love to have an easier option. This is not politics, this is math."
Garcia Padilla and senior staff members told the publication last week during an interview that the island, a US commonwealth, would likely seek concessions from perhaps as many as all of its creditors.
This, the Times reported, could include deferral of some debt payment for up to five years or a lengthened timetable for repayment.
Over the past decade, Puerto Rico's debt has doubled as investors grew increasingly worried that the government was running out of cash.
The Puerto Rican governor is expected to address the debt issue Monday evening in a televised speech.
"We have to make the economy grow," Garcia Padilla told the Times. "If not, we will be in a death spiral."
As a commonwealth, the island cannot file for bankruptcy, meaning a default could take years to resolve, the Times said.
The paper added that Puerto Rico has more municipal bond debt per capita than any US state.
The financial problems of the Caribbean island, which has a population of only 3.6 million, have shaken the large market for US municipal bonds, especially in the wake of the US city of Detroit's declaration of bankruptcy in 2013.
Meanwhile Greece is facing its own debt crisis and growing risk of a euro exit. The country announced early Monday that it will shut banks for a week and impose capital controls, pleading for calm after anxious citizens emptied cash machines.