The International Monetary Fund (IMF) has urged Ghana to accelerate reforms at COCOBOD, warning that mounting stress in the cocoa sector is no longer a narrow agricultural story but a macroeconomic one with implications for foreign exchange inflows, rural incomes, and the durability of stabilisation under the Fund-supported programme.
In a response to a question from NorvanReports on the happenings in the cocoa sector, Ms Julie Kozack, Director of the Communications Department, IMF, said Ghana’s cocoa sector is under pressure from “depressed global prices and domestic production declines”, compounded by “liquidity constraints at COCOBOD”. She described cocoa as “macrocritical”, saying it accounts for close to 10 per cent of export revenue and supports roughly 800,000 farming households.
Cocoa has historically functioned as a stabilising anchor for Ghana’s external position: it supplies foreign exchange, supports jobs across the rural economy, and underpins a financing model in which COCOBOD raises funds to purchase beans and run the supply chain. When the system is stable, it smooths shocks. Stress on the system quickly affects FX availability, fiscal risks, and confidence in the broader reform narrative.
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The IMF’s framing points to a three-part squeeze, with the first one being the external shock: depressed global cocoa prices reduce export receipts and compress the margins that help keep the domestic chain functioning. In a country where FX stability is often judged by the depth and predictability of export earnings, softer cocoa inflows can intensify pressure on the balance of payments, particularly when other inflows (portfolio, Eurobond access, or some commodity cycles) are uncertain or episodic.
Second is the domestic production decline. The causes are structural and cumulative: ageing farms and low replanting rates, disease and climate variability, rising input costs, and incentives that sometimes push beans across borders when price differentials open up. Where production falls, the economics of procurement, quality control and logistics worsen, and the fixed costs of running the system become heavier per tonne.
Third is liquidity. Even when prices and production are imperfect, a well-capitalised buyer can keep the chain moving. But when the main buyer is cash-constrained, the impact is immediate: slower payments, tighter purchasing capacity, higher financing costs, and knock-on effects on farmer confidence and maintenance investment. In cocoa, liquidity is not just a balance-sheet issue; it is a production variable. If farmers doubt the reliability of the purchasing and payment system, the next season’s inputs, labour decisions, and farm upkeep may suffer, reinforcing the decline.
This is why the IMF is pushing hard on reform execution rather than diagnosis. Under Ghana’s Extended Credit Facility program, the Fund said it has “consistently flagged these vulnerabilities,” implying that cocoa-sector risk sits within the broader macro-stabilization agenda and not outside it.
The Fund’s response highlights what it sees as the urgent reform core: “decisive implementation of COCOBOD’s turnaround strategy”, specifically by “ending quasi-fiscal activities, establishing lower-cost financing, and adopting key reforms”.
“Quasi-fiscal” is diplomatic language for costs and obligations that function like government spending but are carried through COCOBOD’s structure rather than being transparently allocated through the budget. Over time, such activities can weaken the institution’s financial position, create opaque liabilities, and make its borrowing more expensive. The IMF’s message is that the cocoa chain requires a foundation free of embedded losses or policy burdens that the balance sheet can sustain to be stabilised.
The annual purchasing cycle heavily relies on lower-cost financing. If COCOBOD’s funding is expensive, volatility-sensitive or structured in ways that magnify rollover risk, it becomes harder to pay promptly, invest in productivity, or withstand price swings. Having cheaper and more dependable financing, whether from better credit conditions, lower risk costs, or a more effective funding system, is seen as essential for being able to handle challenges.
The IMF also calls for “key reforms” without itemising them in its response. But in practical terms, such reforms typically mean tightening governance and controls, improving transparency around costs and liabilities, strengthening procurement and operational efficiency, and resetting incentives so that productivity and quality improvement are rewarded rather than crowded out by short-term financing stress.
The IMF noted that the government has announced “stabilisation measures” and said that, “if fully implemented”, they would be “an important step forward”. The IMF’s familiar phrasing indicates that while announcements are welcome, their credibility hinges on their delivery and quantifiable impact.
In cocoa, “stabilisation” can only mean a narrow set of outcomes: restoring liquidity to the chain, protecting the integrity of procurement and quality control, strengthening the financing model, and supporting production recovery through productivity-focused interventions. The government’s challenge is to sequence reforms so that they stabilise the current season without recreating the same fiscal and quasifiscal vulnerabilities that caused the strain.
For marketers and policymakers, the cocoa question now sits alongside the usual program scorecard. Ghana may post improving headline numbers, but if liquidity stress and production decline weaken a macro-critical export sector, the external position remains vulnerable. The IMF’s message, stripped of diplomacy, is straightforward: fix COCOBOD’s model fast or cocoa becomes a brake on the very stability the programme is trying to lock in.