(Bloomberg) -- Puerto Rico's fiscal collapse won't ruin Christmas for government employees, at least.
Despite a mounting series of bond defaults and a cash crunch so severe it's left the Caribbean island under federal financial oversight, Puerto Rico will make good on $120 million of Christmas bonuses owed to government employees, according to spokeswoman Maribella Martinez. They'll get their money by Dec. 20, five days before the holiday.
The annual bonuses, required under local law that also applies to corporations, provide a seasonal jolt to the Puerto Rico economy, which has contracted as residents move to the U.S. for work. Public employees will receive about $600.
Governor Alejandro Garcia Padilla, who will leave office in early January, has resisted foisting deep fiscal austerity on the island, arguing it would only worsen the island's troubles. He also covered the bonuses last year, just before defaulting on debt payments.
The magnitude of the crisis led President Barack Obama to enact a rescue law in June that empowers a federal board to chart a turnaround plan and oversee negotiations aimed at cutting Puerto Rico's $70 billion debt. The panel is seeking to have such a plan in place by the end of January, after the new governor is sworn in.
The commonwealth is facing $1.3 billion in interest payments in February, when a moratorium sheltering the island from creditor lawsuits expires.
--With assistance from Alex Lopez To contact the reporter on this story: Tatiana Darie in New York at tdarie1@bloomberg.net. To contact the editors responsible for this story: Christopher Maloney at cmaloney16@bloomberg.net, William Selway
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