RIETI - Overlapping Indebtedness from the Viewpoint of Economics: Adequate restraint needed for new loans

In the aftermath of the Great East Japan Earthquake, there remain a host of problems that must be tackled as we proceed with the reconstruction of disaster-affected areas. Amongst all, the problem of overlapping indebtedness is a critical issue. Taking out new loans for post-disaster rehabilitation and reconstruction would create an overlapping indebtedness to those local companies and households that had already been in such situations before the quake hit, and the burden of repayment of both pre- and post-quake debts could cause serious disruptions to their businesses and lives. In this regard, the government has drawn up a set of measures and taken necessary legislative and budgetary actions to work out existing (old) debts and mitigate the burden of new ones.