Obama signs Puerto Rico debt relief bill

US President Barack Obama on Thursday signed into law a bipartisan bill allowing Puerto Rico to restructure its $70 billion debt, just one day before the island would have careened into default.

Obama signed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which establishes a financial control board to restore fiscal discipline on the island. It also blocks potential litigation between the island and its creditors.

Puerto Rico already had missed several payment deadlines and the signing came just hours before the island was expected to default on some $2 billion in debt payments due Friday.

"We've got millions of our fellow citizens in Puerto Rico who have been suffering under one of the worst financial crises, fiscal crises in memory," Obama said at a White House signing ceremony.

The president added that the measure, while "not a perfect bill, at least moves us in the right direction."

As a result of its economic crisis, "you've seen hospitals unable to operate, ambulances shutting down, basic services shutting down, and government workers not being paid. It has brought enormous hardship to Puerto Rico," Obama said.

Lawmakers spent weeks debating the rescue package for the US territory, which has been locked in recession for more than a decade.

Increasingly unable to service its debt, Puerto Rico is blocked by US law from getting formal bankruptcy protection, which would allow a court to force creditors to write off large amounts of its debt.

Critics however condemn the measure for imposing "colonial"-style restrictions on the island, and draconian austerity measures including rollbacks of minimum wage and overtime protections.