PARLIAMENT, ON Tuesday approved a US$1.3 billion receivables-backed trade finance facility between Ghana Cocoa Board (COCOBOD) and a consortium of banks as well as financial institutions to help the former finance cocoa purchases for the 2020/2021 crop season.
Government is the guarantor for the facility.
The house also approved a request for a waiver of stamp duty amounting to the Cedi equivalent of US$6.5 million on the receivables-backed trade finance facility.
The facility and waiver request were presented to the House on Friday, August 7, 2020 by the Minister of Finance, Ken Ofori-Atta, in accordance with Article 181 of the 1992 Constitution.
Chairman of the Finance Committee, Dr. Mark Assibey Yeboah, said the increase in the level of production required substantial financial resources to enable COCOBOD finance the purchase of cocoa beans.
To this end, the syndicated trade finance arrangement was put in place in 1993 to enable COCOBOD secure a loan facility to finance cocoa purchases and other payments each year.
He indicated in a report to Parliament that the board of directors of COCOBOD and the President had given approval to COCOBOD to borrow an amount of US$1.3 billion to finance cocoa purchases for the 2020/2021 cocoa season.
He indicated that the arrangement involved a consortium of several international banks and financial institutions which arranged a credit facility to purchase an estimated 900,000 metric tonnes of cocoa beans in the 2020/2021 crop season.
“COCOBOD is, however, required by the Stamp Duty Act, 2005 (Act 689) to pay a 0.5% of the facility amount as Stamp Duty, and it is in this regard that parliamentary approval was also being sought for the waiver of the payment of Stamp Duty US$6.5 million Cedi equivalent.
Terms of the facility
He revealed that the terms of the financing had a month labour plus 1.75% per annum as interest rate with 0.62% as commitment fee while upfront fee was 1.25% flat.
Proposed Drawdown and Repayment
Dr. Yeboah said the committee was informed that the facility amount would be drawn down in two installments, based on the operational needs of COCOBOD and said US$650 million would be released in October 2020, with a projected cedi exchange rate of 5.7325, while the remaining $650 million would be drawn in November 2020 to February 2021 at the same exchange rate.
“The committee was further informed that the repayment of the principal is to be effected by seven monthly equal installments beginning February 2021 and ending August 2021,” he disclosed.
Fertilizer Budget
He said the committee observed that an amount of GH¢880,841,842.98 was spent on fertilizers for the 2019/2020 crop season, yielding a projected cocoa output of 850,000 metric tonnes.
However, for the 2020/2021 crop season in which COCOBOD projected to achieve a production target of 900,000 metric tonnes, only GH¢661,399,000.02 had been allocated to be spent on fertilizers, he asserted.
He said COCOBOD officials confirmed that the board was scaling down the application of fertilizers for a break since it had been applied for the past three years.
By Ernest Kofi Adu, Parliament House