Puerto Rico faced a historic default Friday as the U.S. territory prepared to enter unchartered waters under the guidance of a newly enacted federal control board to oversee the island's finances amid a dire economic crisis.

The anticipated missed payment of $2 billion in debt payments would be the biggest ever for Puerto Rico and includes $1 billion worth of general obligation bonds that are given top priority by the island's constitution. But Gov. Alejandro Garcia Padilla said the government is short on cash as he signed an executive order Thursday declaring a moratorium on that debt and others.

While the market already anticipated the default, it affects the credibility of a territory grappling with $70 billion in public debt, economist Jose Villamil warned.

"This has enormous consequences," he said. "The default is very significant, and it likely means that Puerto Rico will not be able to re-enter the market for many, many years."

A rescue package signed Thursday by President Barack Obama will temporarily protect Puerto Rico from creditor lawsuits seeking to recover millions of dollars invested in Puerto Rico bonds, which attracted investors because of their triple tax-exempt status. Many of those investors were particularly lured by Puerto Rico's general obligation bonds because of their constitutional guarantee of repayment.

Garcia defended the debt moratorium as well as the state of emergency he implemented Thursday at four government agencies, including the island's largest public university and a retirement system that has been shorted by $40 billion.

"These measures are reasonable and necessary to ensure essential services while the debt is restructured under the legal framework provided by PROMESA," the governor said, referring to the acronym for the bill that Obama signed hours after it won final Senate passage.

The bill emerged from months of negotiation between Democratic and Republican lawmakers and the Obama administration. It creates a federal control board for Puerto Rico that will supervise some debt restructuring and negotiate with creditors. It also allows Puerto Rico to temporarily lower the federal minimum wage for some younger workers.

Obama noted there will be tough work to do to get Puerto Rico out of the hole.

"But it is an important first step on the path of creating more stability, better services and greater prosperity over the long term for the people of Puerto Rico," he said.

Obama said the debt crisis has been a heavy burden for the territory, with basic services shutting down and government workers not being paid.

"We've got to keep on working to figure out how we promote the long-term growth and sustainability that's so desperately needed down there, but the people of Puerto Rico need to know that they are not forgotten, that they are part of the American family," he said. "Congress' responsiveness to this issue, even though this is not a perfect bill, at least moves us in the right direction."

The bill will provide the island's government some breathing room and allow it to pay workers and suppliers on time as well as maintain essential services, Villamil said. However, it's possible the control board could eventually implement austerity measures that could lead to government layoffs and affect services, he said.

Exempt from Thursday's implementation of the debt moratorium is Puerto Rico's heavily indebted power company, which announced that it reached a separate deal with creditors to avoid defaulting on a $415 million payment.

The Electric Power Authority said creditors agreed to buy $264 million worth of new bonds as part of the agreement. Those creditors hold 70 percent of the agency's $9 billion debt. Officials said part of the money will be used for capital projects.

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Associated Press writer Mary Clare Jalonick in Washington contributed to this report.

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Danica Coto on Twitter: www.twitter.com/danicacoto