International Monetary Fund Chief Economist Gita Gopinath has urged governments to shift to “equity-like” support from one focused on loans as the coronavirus pandemic inflicts prolonged damage on companies, Reuters reported.

“Because there's a bigger insolvency issue here, government support would have to shift more towards being equity-like as opposed to debt-like. Otherwise, you would end up with a lot of firms that exit this crisis with a huge amount of debt over-hang,” she said.

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