• Kyodo

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Local governments in Hokkaido may expand relief for small and medium enterprises hit by Mount Usu’s eruption last year after criticism that existing arrangements do not meet victims’ needs, government officials said.

The plan, which would offer expanded loans and partial debt guarantees, was presented recently by the Hokkaido Prefectural Government to three municipal governments near the volcano — Abuta, Date and Sobetsu.

The three governments hope to inaugurate the plan in July and offer it through the end of this year.

In July 2000, the prefectural government began offering up to 10 million yen in concessionary loans at annual interest rates of up to 1.3 percent to small and medium businesses needing to refinance loans they had established before the March 31 eruption.

While it marked the first relief measure of its kind for victims of a volcanic eruption in Japan, only 2 percent of the total loan quota of 3 billion yen has been used, apparently because of stringent lending criteria.

Local communities and businesses have requested improvements to the refinancing plan because hoteliers and other tourism businesses in the area’s Toyako hot spring resort remain closed for business, with travelers tending to avoid the area. Changes to the refinancing plan, if implemented, would lift the ceiling of loans that may be extended to 100 million yen or one-third of the borrower’s total loans, whichever is lower.

Of this amount, repayments of up to 20 million yen would be backed by the prefecture’s credit guarantee association, and half of any portion beyond 20 million yen would be guaranteed by local governments if borrowers were unable to pay.

But the new plan still limits borrowers to those firms who have seen sales in the past two months drop to less than half of the level recorded two years earlier, a restriction municipal officials see as unacceptable as it would make most firms ineligible.

Prefectural and municipal officials are considering easing the condition.

If realized, the new relief plan would be the first debt guarantee offered by local governments for companies hit by a natural disaster, according to the central government.

Although tourists are gradually returning to the Toyako hot spring resort, school excursions to the area, its main source of revenue, have not recovered. This has raised fears that many local tourism operators will go under, they say.

The eruption of the 732-meter Mount Usu forced the evacuation of up to 16,000 residents last year, none of whom were injured. It was the volcano’s first eruption in 23 years.

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