March 13, 2018 / 4:35 PM / 10 days ago

Ghana's Cocobod CEO says will not default loan repayments

ACCRA, March 13 (Reuters) - Ghana’s cocoa industry regulator Cocobod is confident it will promptly repay its creditors, including those subscribed to a $1.3 billion syndicated loan, despite an expected drop in production, Chief Executive Joseph Boahen Aidoo said on Tuesday.

Cocobod was already under financial strain due to outstanding debts to the central bank and the costs of maintaining what it pays farmers in the face of a steep decline in global prices last year.

On Monday Aidoo told Reuters that the world’s second largest cocoa producer might only produce around 700,000 tonnes of beans this season, well short of an initial forecast of 850,000 tonnes.

“I wish to assure lenders that we are on course and we will fully meet our obligations towards the $1.3 billion we signed for the 2017/18 season,” Aidoo told reporters.

For more than two decades, Cocobod has held annual loan syndications to raise financing to pay farmers and bring in the crop. It has then used the proceeds from the sale of that cocoa to international traders to repay the loan promptly.

Banks have long considered Ghana’s cocoa loan syndication a safe bet and it is generally oversubscribed.

“We have shown over the past 25 years that Cocobod is credible and has never defaulted, and will not default this year,” Aidoo said.

He added that Cocobod had met the first scheduled repayment late last month.

Following an election in late 2016, Ghana’s new President Nana Akufo-Addo replaced Cocobod’s senior management, who later said the previous team had exhausted the financing provided by the loan with most of the 2016/17 season still remaining.

The central bank issued cocoa bills to help bring in the rest of that crop. It issued more cocoa bills early this year to close a 2 billion cedi ($452.3 million) deficit created by the decision to keep the farmer price unchanged.

Cocobod currently owes the central bank about 5.5 billion cedis, debt that Aidoo said the regulator was negotiating to have restructured.

Ghana is in its final year of a $918 million credit deal signed in 2015 to lift economic growth and narrow its fiscal deficit, inflation and public debt, which reached 68.7 percent of GDP last November.

$1= 4.4220 Ghanaian cedis Reporting by Kwasi Kpodo Editing by Joe Bavier and David Evans

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