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UPDATE 2-Ghana's $1.8 bln loan for 2016-17 cocoa "is all gone" - Cocobod
March 29, 2017 / 3:35 PM / 8 months ago

UPDATE 2-Ghana's $1.8 bln loan for 2016-17 cocoa "is all gone" - Cocobod

* Ghana to review cocoa contracts signed by previous government

* Traders say no slowdown in exports

* Licensed buyers say Cocobod delayed payments (Adds quotes, comment, context)

By Matthew Mpoke Bigg

ACCRA, March 29 (Reuters) - The $1.8 billion syndicated loan Ghana procured to purchase cocoa for the 2016-17 season “is all gone” and the country must seek more funding to make purchases for the rest of the season, the new chairman of industry regulator Cocobod said.

Ghana is the world’s second biggest producer of cocoa behind neighbouring Ivory Coast and the crop, whose season runs from October to September, is one of its top foreign exchange earners along with gold and oil.

As a result, the problem is an additional headache for the new government of President Nana Akufo-Addo, which is also trying to stabilize national finances under an International Monetary Fund programme and restore rapid economic growth.

“The syndicated loan of $1.8 billion that we had hoped to use for this production year unfortunately ... is all gone ... So it falls on us to immediately try and organise some financing,” Cocobod’s Hackman Owusu-Agyemang said at his swearing-in ceremony.

He gave no details on what he believed had happened to the money or how Cocobod would go about securing additional financing.

However, a senior government official told Reuters the shortfall was linked to wider mismanagement at Cocobod. The official, who declined to be named, said the government was now cleaning up the regulator and seeking to impose strong financial management, efforts he believed would encourage banks to participate in next season’s syndicated loan.

Cocobod purchased more than 670,000 tonnes from the start of the season to March 9 and a Dutch trader said the regulator, which sold forward the bulk of its crop when prices were high last year, may already have recouped this season’s loan amount.

Owusu-Agyemang said Cocobod must tackle a debt overhang of at least 5 billion cedis ($1.1 billion) and will review all contracts signed by the previous government, adding that some of them looked “out of place”.

Depletion of the loan potentially explains licensed cocoa buyers’ complaints in February that delays in the release of Cocobod financing were hindering their ability to purchase beans needed to fill their supply contracts.

Those delays particularly impacted local buyers who rely on Cocobod for advance financing. One buyer told Reuters that Cocobod was still only paying sporadically and the problem was the worst in years.

But three traders said on Wednesday they had seen no slowdown in exports of cocoa from Ghana.

Owusu-Agyemang’s revelation concerning the loan comes as Ivory Coast is facing a crisis in its own cocoa sector brought on by a wave of export contract defaults and higher than expected production that have created a glut of beans. (Additional reporting by Nigel Hunt in London; Editing by Joe Bavier and David Evans)

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