July 10, 2020 / 2:17 AM / a month ago

IMF's chief economist urges 'equity-like' govt support for virus-hit firms

TOKYO, July 10 (Reuters) - International Monetary Fund Chief Economist Gita Gopinath said on Friday governments must shift to “equity-like” support from one focused on liquidity provision as the coronavirus pandemic inflicts prolonged harm on companies.

Government support in the form of loans would saddle companies with huge debt, which would serve like a tax that makes it difficult for them to emerge from the crisis, she said.

“If the lending takes form more like equity ... then that’s less onus on the firms. That will make it easier for firms to recover from the crisis,” Gopinath said in a webinar co-hosted by the IMF and the University of Tokyo. (Reporting by Leika Kihara; Editing by Chris Gallagher)

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