Puerto Rico braces for austere budget amid warnings of a financial shortfall

Economic Indicators Associated Press

Puerto Rico's governor says he will soon submit one of the most austere budgets in the island's history and he's appealing to U.S. President Barack Obama's administration and a divided local legislature to work together in finding solutions for the U.S. territory's fiscal crisis.

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Friday's call from Gov. Alejandro Garcia Padilla came just hours after Puerto Rico's Government Development Bank released a report warning of a possible moratorium on debt payments. The bank also said it and the government could run out of money soon.

Puerto Rico is struggling to raise new revenue as it faces $72 billion in public debt. Legislators recently rejected a proposal to implement a new tax despite warnings from Garcia that it would have a detrimental effect on the economy.