Professor John Gatsi Dismisses Fiscal-Monetary Conflict, Calls for Alternative Investment Instruments
Professor John Gatsi, Dean of the University of Cape Coast Business School, has refuted claims of a conflict between fiscal and monetary policy, arguing instead that increased coordination between the two is taking place.
Speaking during a NorvanReports and Economic Governance Platform (EGP) X Space discussion on the theme “Fiscal vs Monetary Tug-of-War: Economic Salvation or Damnation?”, Prof. Gatsi emphasized that while past instances of fiscal dominance may have created tensions, current policies indicate a concerted effort towards achieving economic stability.
“I have not seen any real conflict between fiscal and monetary policy. There is currently coordination happening between the two, forcing both monetary and fiscal authorities to engage more actively,” he stated, referencing Finance Minister Dr Cassiel Ato Forson’s remarks on Treasury bill rate reductions and future coordination.
Prof. Gatsi however, highlighted the constraints within the financial markets, particularly the limited availability of alternative investment instruments beyond Treasury bills.
He noted that institutions mobilizing funds for investment are facing a shortage of long-term instruments, making it imperative for the government to introduce options beyond the 91-day Treasury bill.
He welcomed the Bank of Ghana’s recent introduction of a 273-day bill, describing it as a step towards providing investors with greater flexibility. However, he cautioned that sustaining Treasury bill rate reductions would be difficult without offering investors diversified alternatives.
“We have met individual and institutional investors who were discouraged by the pace of Treasury bill rate reductions. The recent undersubscription of Treasury bills signals market reaction to these developments,” he observed.
Meanwhile, Prof. Gatsi has commended the government’s fiscal discipline in adhering to its borrowing targets, adding that the key objective remains to ensure economic stability, responsible growth, and job creation.
