THE government said a proposed equity infusion program for large companies will match whatever amount an individual firm can raise from banks, while program participants cannot declare dividends, must freeze executive pay, and defer spending on non-essentials.

At a forum organized by the Manila Times Thursday, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the government’s economic team is planning to help recapitalize large firms deemed strategic which are unable to deal with the economic shock of the coronavirus crisis.

Mr. Chua said the proposed equity infusion program will “match whatever banks will be lending them.”

“For the large firms, we are proposing a time-bound, joint venture (structure) with our GFIs (government financial institutions) and the private sector to provide a targeted (and) time-bound equity infusion to the bigger firms that are strategic, matching whatever banks (are) lending them,” Mr. Chua said during the online forum.

Among the conditions for participating in the program, “they cannot pay dividends, increase their executive pay (or) spend on luxuries or representation and so on. These are in the plans right now,” he added.

According to Finance Assistant Secretary Antonio Joselito G. Lambino II, other details of the recapitalization program are still being drafted.

In a separate forum on May 15, Mr. Chua said firms in the tourism and travel industries could be among those qualified for the program as they were among the hardest-hit “but there are many more that we are hoping to help.”

He also said then that a priority was to “minimize the fiscal risk for the government.”

The recapitalization program is part of the three-phase recovery program proposed by the economic team to Congress.

Several recovery bills are now being discussed at Congress including the CREATE bill or the Corporate Recovery and Tax Incentives for Enterprises Act, which calls for an immediate reduction in the corporate income tax to 25% this year from 30%.

For smaller firms, Mr. Chua said government-backed loans through PhilGuarantee will help small and medium enterprises obtain easier access to credit while the wage subsidy program helped them retain their employees during the lockdown period.

He said the economic team is also hoping to deploy the capital of state-owned banks, which will act as wholesale banks for smaller banks, rural and thrift banks, among others, to facilitate micro firms’ access to credit.

The economic team has proposed a P170 billion stimulus program to help the economy get back on track, which includes P50-billion in capital infusions for state-owned banks, and the rest to support additional funding for guarantee loans, mass hiring of contact tracers and the equity infusion program. — Beatrice M. Laforga