$3.1-B In Japan Zero-Interest COVID Loans "Unrecoverable"

Some 468.5 billion yen (about $3.1 billion) of the 1.44 trillion yen (approx. $9.45 billion) in interest-free loans extended by the Japanese government to needy households during the coronavirus pandemic is deemed unrecoverable, Japan's Board of Audit found, Toru Watanabe reported for Mainichi Japan.

The special loans included temporary emergency microcredit and general financial aid for daily living, allowing households to receive up to 2 million yen (around $13,100). I Photo: James Heilman, MD Wikimedia Commons

The total unrecoverable amount may be even higher, as the government continues writing off loans for households that remain low-income, with around 140,000 applications for loan forgiveness pending.

The special loans included temporary emergency microcredit and general financial aid for daily living, allowing households to receive up to 2 million yen (around $13,100).

Compared to the government’s existing “livelihood and welfare” low-interest loans, the criteria for these pandemic loans were more lenient, with no requirement for a financial independence plan—prioritizing speed to address the crisis.

From March 2020 through September 2022, during the height of the pandemic, the national government approved 3.82 million loan applications. It began seeking repayments in January 2023, but by the end of March this year, 1.31 million cases had been forgiven, totaling 468.5 billion yen.