Authored by Jeremy Portnoy via RealClearWire,
Topline: The five inhabited U.S. territories are collectively $57.8 billion in debt and have issues with their financial statements that “can lead to poor financial decisions and lost access to capital markets,” according to a new report from the Government Accountability Office.
Key facts: The GAO suggested that the territories may struggle to repay their debt even more than the 50 U.S. states. The territories have high energy and import costs, extreme weather, economies that rely on just a few industries, and had a population decrease from 2010 to 2020.
Puerto Rico holds the most debt by far with $52.8 billion as of 2022, which is 47% of its gross domestic product. Guam ($2.5 billion of debt as of 2023), the Virgin Islands ($2.2 billion as of 2021), the Northern Mariana Islands ($121 million as of 2021) and American Samoa ($145 million as of 2023) are also struggling to balance their budgets.
If some of those statistics seem outdated, it’s because they are. The territories are supposed to release financial statements nine months after each fiscal year ends, but American Samoa is the only one meeting that deadline.
While Guam includes 2023 figures, it issued them seven months late.
The delays could hurt the territories’ credit rating, making future borrowing more expensive, according to the GAO. The territories also can’t be audited if they don’t have financial statements, which the GAO says will make it more difficult to identify potential fraud.
American Samoa is also the only territory properly managing its federal funds. The other four territories all had “questioned costs” in the most recent audits of their financial statements, which could mean “there was a violation or possible violation of a statute, regulation, or the terms and conditions of a federal award.”
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Background: The five U.S. territories are just one piece of the gigantic debt burden across America. The 50 states were collectively $811 billion in debt at the end of 2023, and the 75 largest cities were $300.7 billion in debt, according to estimates from the think tank Truth in Accounting. The federal debt is over $36.2 trillion.
Summary: Apparently, public officials’ penchant for spending more money than is available is not limited to the contiguous United States.
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