King Cash May Reign for Weeks in Storm-Ravaged Puerto Rico

(Bloomberg) -- In post-hurricane San Juan on Monday, commerce picked up ever so slightly. With a little effort, you could get the basics and sometimes more: diapers, medicine, or even a gourmet hamburger smothered in fried onions and Gorgonzola cheese.

But almost impossible to find was a place that accepted credit cards.

“Cash only,” said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan's Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. “The system is down, so we can't process the cards. It's tough, but one finds a way to make it work.”

The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U.S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules.

The situation further frustrates one of the many challenges already facing a government that has sought a form of bankruptcy protection after its debts swelled past $70 billion: boosting revenue by collecting money that slips through the cracks.

Tax Contempt

In fact, the power blackout only exacerbates a situation that has always been, to a degree, a fact of life in Puerto Rico. Outside the island's tourist hubs, many small businesses simply never took credit cards, with some openly expressing contempt for tax collectors and others claiming it was just a question of not wanting to deal with the technology.

But those were generally vendors of bootleg DVDs, fruit stands, barbers -- not major supermarkets. Now, the better part of the economy is in the same boat.

Cash was in short supply. Many Puerto Ricans were still living off what money they thought to withdraw ahead of the storm. Most ATMs on the island still weren't working because of the power outage or because no one had refilled them.

In Fajardo, a hard-hit coastal area, the paper printouts taped to sheet metal storm shutters read: “Cash only, thank you.” Jenny Rivera Valentin, a 50-year-old hair dresser from Humacao, didn't mind. She was just glad to find an open store. Her town had been “totally destroyed,” she said. And just about every place was closed.

At the nearby Fajardo CVS -- or CV, as it appeared with the S obliterated by Maria -- the signage was similar: “Cash” scrawled in red marker.

As Banco Popular, Puerto Rico's biggest bank, opened Monday morning in San Juan, the line stretched about 200 people deep for banking and ATM services. People fanned themselves with whatever they could find and held umbrellas against the sun. At the back stood Giddel Galliza, 64, a music teacher.

“I didn't want to come because of the lines,” he said. “I need money for basic needs, food, gas -- my tank is full but it won't be forever. I normally pay with my card.”

Across the street at Banco Santander it was much the same story. Erasmo Santiago, a 63-year-old mailman, said he was actually a Popular client but opted to pay a fee and go for the slightly shorter line. “I have my mom living with me, she's 83,” he said. “So I need money.”

To contact the reporter on this story: Jonathan Levin in Miami at jlevin20@bloomberg.net.

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net, Peter Eichenbaum