Ghana’s Finance Minister, Dr. Cassiel Ato Forson on Tuesday March 11, presented the 2025 Budget and Economic Policy to Parliament. The theme of the Budget was “Resetting Ghana for the economy we want.”
Dr Cassiel Ato Forson highlighted significant fiscal risks facing Ghana’s cocoa sector. He told Parliament that “COCOBOD’s outstanding debt stands at 32 billion Cedis”. “The cocoa sector, which has long been the backbone of the Ghanaian economy, is sadly on its knees owing to gross mismanagement in the last few years and is now unable to support the economy as it should despite record-high world market prices” Dr. Ato Forson said.
He additionally noted that, “Cocoa production has declined by nearly 50% over the past three years, with COCOBOD unable to meet its full contractual obligations in the 2023/2024 crop season, resulting in a shortfall of 330,000 tonnes. This under-supply has been rolled over for subsequent supply by the new administration”.
“These 2023/24 forward sales contracts locked-in at lower prices than current market rates, have resulted in revenue losses of US$840 million for both COCOBOD and impoverished the Ghanaian farmer” he added.
The Finance Minister said the sector faces significant financial challenges, including unsustainable debt and quasi-fiscal expenditures such as cocoa roads, which are considered a non-core function.
“The sector faces declining output and financing challenges characterized by unsustainable debt, roll-over contracts and quasi-fiscal expenditures including cocoa roads, a non-core function” He said
COCOBOD’s financial liabilities are substantial, with an outstanding debt of GHC32 billion, of which GHC11.92 billion is due for payment in 2025. Additionally, cocoa road contracts reached GHC21 billion (US$1.3 billion) in 2024, with only GHC4.4 billion accounted for in COCOBOD’s financial statements.
The sector also faces risks from market price disparities and smuggling. The significant gap between market prices and payments to farmers incentivizes smuggling, posing a threat to the industry’s long-term sustainability.
To address these challenges, the Finance Minister emphasized the need for reforms.
“This situation underscores the need for reforms to address these fiscal risks and ensure the sector’s viability” Dr. Ato Forson said.
Source: GBC
