The International Monetary Fund (IMF) has acknowledged that the Ghana Cocoa Board (COCOBOD) has implemented a turnaround strategy aimed at enhancing transparency, efficiency, and financial sustainability.

COCOBOD, responsible for facilitating cocoa production and holding an export monopoly, has historically faced losses due to a lack of systematic mechanisms for setting producer purchase prices (PPPs), significant quasi-fiscal activities (such as road construction and input subsidy programs), and substantial administrative costs.

The accumulated debt of COCOBOD in recent years became burdensome, necessitating a restructuring.

The IMF reports that COCOBOD's turnaround strategy primarily focuses on streamlining development spending, aligning the PPP setting process with the Board's financial constraints, and improving oversight.

The IMF finds these efforts broadly consistent with its own recommendations.

Quasi-fiscal Initiatives

The document stated that COCOBOD has assessed current cocoa road contracts with the intention of substantial rationalization, taking into account factors such as their progress, performance, and termination expenses.

“Additional rationalisation may be pursued in case of financing pressures. The board also intends to scale down fertilizer and pesticide subsidy programmes”.

Price setting

The IMF announced that the government and COCOBOD will initiate the implementation of a designated range for Producer Purchase Price (PPP) as a percentage of the Free on Board (FOB) export price.

This range, subject to biennial reviews, aims to ensure an equitable distribution of export proceeds among farmers and various stakeholders in the value chain. Additionally, it is designed to secure a reliable revenue stream for COCOBOD, covering both operational and financial costs.

For the upcoming 2024 and 2025 seasons, the authorities have established the minimum and maximum PPP (inclusive of Living Income Differential cost) at 60% and 70% of the contract FOB price.

Oversight

The document clarified that the government will enhance the Ministry of Finance's supervision of COCOBOD's finances, which includes the establishment of a specialized cocoa desk within the Ministry of Finance.