Gov’t’s restructuring of cocoa bills not a surprise, says Joe Jackson
Director of Operations at Dalex Finance, Joe Jackson, has expressed his lack of surprise regarding the government’s decision to restructure cocoa bills.
Mr Jackson stated that this move was expected due to the requirements set by the International Monetary Fund (IMF) in the lead-up to the approval of the $3 billion bailout program.
During a Twitter Space conversation hosted by NorvanReports and titled “DDEP 2 and Its Impact on the Cocoa Industry – How do we fund the bills,” Mr Jackson explained that the high coupon rates on the cocoa bills, which were above 30%, prompted the government to aim for a reduction to 12%, resulting in a 20% decrease in the coupon rate.
“I am not surprised at Government’s intention to restructure the cocoa bills, it was anticipated given the IMF conditions. Coupon rate on the cocoa bills was high above 30% and Government was looking to bring it down to 12% and so that meant 20% reduction in the coupon rate,” he remarked
Speaking further during the Twitter Space Conversation, Mr Jackson raised concerns about the significant operational costs incurred by COCOBOD, which he believed were the primary reason for its lack of profitability over the years.
He attributed the high operational costs to COCOBOD’s large workforce and the government’s imposition of quasi-fiscal responsibilities, such as road construction and fertilizer distribution.
Mr Jackson criticized COCOBOD’s spending habits, emphasizing the need for the government to stop utilizing COCOBOD as a piggy bank and instead reduce its operational costs, further calling for COCOBOD to be run as a profit-oriented business.
“COCOBOD spends as if there is no tomorrow, it is spending on roads, fertilizers, and a whole lot and making huge losses in the process and so how is it going to fund the cocoa bills,” he questioned.
“The Government must stop using COCOBOD as its piggy bank and reduce its operational costs. It must be run like a real business, in such a way that it will make profit,” he added.
The government, along with several banks in the country, recently agreed to restructure cocoa bills worth GHS 8.1 billion. This restructuring is part of the government’s broader domestic debt restructuring program (DDEP), which aims to restructure a total domestic debt of GHS 123 billion.
The successful restructuring of this debt is crucial for Ghana to access the second tranche of $600 million under the IMF’s $3 billion balance of payment support as part of the new bailout program.
