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

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

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.

International Monetary Fund Chief Economist Gita Gopinath takes questions at the annual meetings of
FILE PHOTO: International Monetary Fund Chief Economist Gita Gopinath takes questions at the annual meetings of the IMF and World Bank in Washington, U.S., October 18, 2019. REUTERS/James Lawler Duggan

TOKYO: 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)

Source: Reuters

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