Puerto Rico is “effectively in default” and urgently needs authority to be able to restructure its debt, US Treasury Secretary Jacob Lew said Thursday.

“Look, Puerto Rico has a terrible financial problem,” Lew said in an interview on Fox Business News. “They’re essentially insolvent.”

“They have $70 billion in debt. The debt needs to be restructured.”

The US territory has “already been taking money out of pension funds to pay current bills” and “shifting money for one creditor to pay for another creditor,” Lew said.

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