The International Monetary Fund has said that Ghana Cocoa Board (COCOBOD) has developed a turnaround strategy to strengthen the transparency and efficiency of its operations and ensure financial viability.

The state-owned entity mandated with facilitating cocoa production and exercising export monopoly—has long registered losses due to the absence of a systematic mechanism for setting producer purchase price (PPP), significant quasi-fiscal activities (roads construction and input subsidy programs), and large administrative costs.

The debt accumulated by COCOBOD over the past few years became too expensive to service and had to be restructured.

The IMF said COCOBOD’s turnaround strategy focuses on rationalising its development spending, better aligning the PPP setting process with the Board’s financing constraints, and enhancing oversight is broadly consistent with its staff’s recommendations.

Quasi-fiscal activities

The report said COCOBOD has reviewed existing cocoa road contracts with a view to rationalising them significantly, considering their completion status, performance, and termination costs.

“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 said the government and COCOBOD will start introducing a range for PPP set as a share of the FOB export price.

The range, which will be reviewed every other year, would ensure not only a fair distribution of export proceeds among farmers and other stakeholders in the value chain but would also guarantee a sufficient revenue stream for COCOBOD to recover its operational and financial costs.

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

Oversight

The report explained that the authorities will strengthen the Ministry of Finance’s oversight of COCOBOD’s finances, including through establishing a dedicated cocoa desk at the Ministry of Finance