The Bank of Ghana (BoG), has received the first tranche of $800 million of this year’s cocoa syndication to meet market demands and support other foreign exchange transactions.
A source at the BoG who disclosed this in an interview with The Ghanaian Times in Accra yesterday, said the bank was expecting additional $1 billion as final drawdown.
“We just got the first $800 million and we are expecting more inflows in the coming days,” it said, adding that the central bank is well placed now to meet market dollar demands.
The Ghana Cocoa Board last month, signed a syndicated $1.8 billion from international lenders for the 2015/16 cocoa purchases which began last Friday.
Analysts believe the hard currency inflows will greatly help to support the local currency.
The cedi, which declined sharply in the first half of the year, has rallied strongly in recent weeks on expectations of the loan which was heavily oversubscribed.
Speaking in an interview with The Ghanaian Times on the impact that the inflow would have on the economy, Dr. John Gatsi, an economist and senior lecturer at the Business School of the University of Cape Coast, said the release of the first tranche was very timely as it would further enhance the stability of the Cedi.
“When that money hits the account, the central bank then forwards cedi equivalent to engage in COCOBOD activities. It is the exchange (dollar to cedi) that will be positive for the larger economy,” he said.
He said “traditionally, the cocoa syndicated loan helps currency management because it provides input of foreign exchange in the economy.
“Over the years, when the loan comes, it reduces the instability of the local currency. It’s good news that the loan has started coming,” he said.
Dr. Gatsi said “apart from the stability of the local currency, the syndicated loan is such that it provides a revenue hedge for the cocoa industry in the sense that the deal which has been signed protects a certain price for cocoa farmers”.
He said the loan would also result in the construction of some cocoa roads allowing for the haulage of cocoa from the hinterland.
Mr. Derick Mensah, Senior Financial Analyst at the African Alliance Securities said the inflow of the syndicated loan was good news, especially coming on the back of the country’s inability to raise money from the Eurobond.
He, however, said the government’s postponement of the Eurobond would have a negative impact on the cedi because the proceeds from the Eurobond was expected to shore up the value of the cedi.
“Proceeds from the Eurobond, together with that of the $1.8 billion cocoa syndicated loan was expected to boost the performance of the cedi which has experienced some level of stability against major trading foreign currencies for some weeks now but the inability of the government to conclude the Eurobond will no doubt affect the prospects of the local currency,” he said.
By David Adadevoh