(Reuters) 211; A series of earthquakes that recently hit Puerto Rico poses a setback for the bankrupt U.S. territory in terms of its economic recovery and ability to retain residents and businesses, Moody’s Investors Service said on Tuesday.
The quakes included one with a magnitude of 6.4 on Jan. 7, the Caribbean island’s most powerful earthquake in 102 years. Governor Wanda Vazquez estimated damages at $110 million and has requested a major disaster declaration from President Donald Trump.
Moody’s said the earthquakes highlight “significant environmental risks” facing Puerto Rico, which has been in federal court since 2017 attempting to restructure about $120 billion of debt and pension obligation through a form of municipal bankruptcy.
“Damage from the quakes is likely to blunt a recent trend of positive economic activity and increase the risk of more residents and corporations looking to relocate,” the credit rating agency said in a report.
The positive trend includes growth in population, employment and real economic output last year, according to the report.
An increase in the types and frequency of natural disasters on the island could make it harder to attract or expand operations by corporations, Moody’s said. Compounding that problem is an expected phasing out by the U.S. Treasury of a business tax credit for American corporations based there, it added.
Puerto Rico is still struggling to recover from devastating hurricanes in 2017 and Moody’s noted the island has received only a fraction of the federal funding allocated in the wake of that disaster.
(Reporting by Karen Pierog in Chicago; Editing by Matthew Lewis)