With revenues plummeting, companies are in dire need of cash — but consumption alone cannot solve this situation, because it too is currently declining due to layoffs and technical unemployment. Therefore, buyers and users of products and services can't help, but another stakeholder could. I am convinced that the government could support the business community by introducing a new type of financing that would be applicable even in the post-pandemic economic context (when the financing needs of recovering businesses will demand significant amounts of cash).
Financing through bonds
For listed companies, the government could establish by law a system where companies with mixed or private capital issue bonds to be purchased exclusively by the State. Such a system is not yet enacted in Romania: private property is guaranteed by the Constitution, and the State cannot intervene in the management of companies with full or majority private capital.
This particular type of bonds should be exempt from interest for one year or benefit from a grace period of one year from the date of acquisition; the issuer should have the right of pre-emption for buy-back at the end of the grace period. If they are not repurchased by then, the bonds will become interest-bearing.
The value of these bonds could be limited by law (as a precaution) — for example, one could set a threshold of 30% of the total net assets of the issuing company. If the issuer does not benefit from the pre-emption right at the end of the grace period, the state may alienate these bonds on regulated capital markets. After entering the private financial circuit, these bonds could be transformed into share capital, in compliance with Law no. 31/1990 (the Companies' Law).
This solution could also extend to private equity companies that are not listed on the stock exchange; thus, the Romanian state could meet the financing needs of all large companies, without significantly influencing market mechanisms. Moreover, this limited influence could benefit the whole economy, as the state's presence on the credit market would force commercial banks to practice reasonable interest rates.
For those companies of national and strategic interests that have private capital, are listed on the stock exchange, and need urgent financing, the state could initiate temporary participations in their share capital. These participations should be achieved through acquisitions of new shares issued by these companies, which — once the financial difficulties are overcome or within a maximum of one year from the first signs of macroeconomic recovery — should be offered for trading on the Romanian Stock Exchange. Thus, the state would recover its temporary investments and would even have the possibility to obtain an income from these investments (capital gains) if the market value of the shares increases. The introduction of a temporary character by law for these acquisitions is imperative in the context of the Romanian Constitution, to avoid any negative consequences (i.e., an attempt at disguised nationalization).
This idea has already been tested and proven efficient: similar systems to support privately-owned companies have been put in place in countries around the world as part of the quantitative easing policies initiated in the context of the 2006-2009 financial crisis.