Government has defended its decision to reduce the syndicated loan for cocoa beans purchases for the 2017/2018 crop season, by about 28 percent.
The country will be seeking 1.3 billion dollars from its lenders for cocoa purchases for the next crop season which starts in October 2017.
This amount is lower compared to the 1.8 billion dollars the country secured last year.
Deputy Agric Minister, William Kwaitoo explains to Citi Business News the move is to avert high losses associated with the declining global prices of cocoa.
In his view, the declining prices of the commodity on the global market make a reduction of the loan necessary.
“We are also reducing the figure because cocoa prices have dropped significantly on the international market from the 2800 dollars per tonne to figures less than 2000 dollars per tonne,” he stated.
The Deputy Minister also asserted that the erstwhile NDC government had opted for the relatively higher figures as it wanted to obtain funds to undertake critical investments such as the revamping of cocoa sector roads.
Though he admits that the plan is a laudable one, he contend that the financial burden on the country could not be continued.
“We think that sometimes, the previous government was contracting loans as much as those figures because they wanted to bring in more money to solve other challenges but the main thing is to bring the money to purchase cocoa and use the surplus to solve challenges facing the cocoa sector.”
Last year, the country obtained its loan at an estimated rate of 1.5 percent.
This has been cited by some industry watchers as a relatively affordable one.
But William Kwaitoo maintains the decision is in the country’s interest.
“Someone would argue that the loan comes at a cheap rate so it would be advisable to go for loan even if it is at that rate to solve all the problems confronting us. But if we do that the quantity of cocoa that we will need to defray the debt may not be available because the tonne of cocoa has reduced which will require huge quantities of the crop,” he stressed.
The loan was concluded by some 24 syndicated banks.
At the time, the CEO of the Ghana COCOBOD, Dr. Stephen Opuni was confident of meeting the 850,000 metric tonnes and 900,000 metric tonnes for the 2016/2017 crop season.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana