Puerto Rico's Government Development Bank said Monday it had reached an agreement with some of its creditors to continue negotiating a deal to restructure its debt, potentially stemming an expected slew of lawsuits that would otherwise arise from its default.

The Reuters news agency said the deal was a long way from done as it would require participation of all the lender's creditors in order for it to work. But its effect was to avoid a flood of legal action in the wake of Sunday's announcement that San Juan would only be able to pay the interest portion of Puerto Rico's debt.

The US territory is struggling under the weight of $70 billion (61 billion euros) in debt, a staggering 45-percent poverty rate and a shrinking population.

Protracted downturn

Governor Alejandro Garcia Padilla said Puerto Rico had to default on its debt because it needed the money to keep critical services running, such as health care and schools.

The US Congress is debating a bill that would put the island's finances under federal oversight and allow it to restructure debt in a bankruptcy-like process. As a US territory, Puerto Rico does not currently have access to municipal bankruptcy protection.

The island has been suffering through more than a decade of economic decline since Congress phased out tax cuts that had made Puerto Rico a center of pharmaceutical and medical equipment manufacturing.

hg/cjc (Reuters, AP, dpa)