Japan will create a framework to inject capital into large and midsize companies struggling amid the coronavirus pandemic, government and ruling party officials said, as the health crisis threatens to inflict even deeper pain on its ailing economy.

The move would mark an escalation in the government’s crisis response, which so far has focused on loans and subsidies to small firms, in a sign of its concern over the widening damage from the contagion.

Under the scheme, state-affiliated lenders will invest in ailing companies by offering subordinated loans or accepting preferred shares, four officials said on condition of anonymity as they were not authorized to speak publicly.

Investment by the government will help companies strengthen their financial standing, which would allow them to borrow money from banks more easily and avoid downgrades to their credit ratings.

The tool will be included in a fresh package of measures the government will map out to cushion the economic blow from the pandemic, and funded partly by a second supplementary budget for fiscal 2020 that began in April, the officials said.

A panel of ruling party lawmakers began a series of meetings on Wednesday to work out the details and discuss other ideas to forestall bankruptcies.

Yoichi Miyazawa, chairman of the panel, said last month that the government and central bank may need to set up a special purpose vehicle to inject capital into companies hit by the pandemic.

The world’s third-largest economy is on the cusp of a deep recession, as the pandemic has forced households to stay home and businesses to shut down. Japan has reported nearly 16,800 official coronavirus infections, including cases related to cruise ships, and over 700 deaths.

Big companies in key industries, including auto giants like Toyota Motor Corp., have suffered slumping profits, stoking fears of a wave of bankruptcies and job losses that could devastate an already weakening economy.

“If a big company goes under, it leads to several tens of thousands of job losses. It would also have a devastating impact on regional economies,” Finance Minister Taro Aso told the Diet on Thursday.

“We need to make sure that doesn’t happen,” he said.

The government has said it will use all available tools to help Japan’s car and autoparts makers hit by supply chain disruptions, slumping demand and factory shutdowns caused by the health crisis.

The Bank of Japan also plans to hold an emergency policy meeting as early as this month to set up a reward plan for financial institutions that boost lending to small firms hurt by the coronavirus.

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