Economy

VI Government Risks Default Because of Mounting Debt, Dying Pension System, Rating Agency Warns

Moody's, one of the most respected rating agencies in the world, on Thursday gave a bleak assessment of the V.I. government's standing that could affect the Bryan administration's attempts to secure bonds at a time when it needs liquidity the most.  In a review of the GVI's financial standing, Moody's said the V.I. government, faced with mounting debt and a pension system projected to collapse soon, could move to restructure its debt. When a government defaults on a debt, the government disposes or ignores its financial covenants toward certain creditors. The immediate effect for the government is a reduction in its total debt and a reduction in payments on the interest of that debt. "Despite some recent improvement in the government's liquidity and near-term financial position, the rating incorporates the risk that the reemergence of a significant structural deficit, combined with the expected insolvency of the Government Employees' Retirement System, will lead the government to r...