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Business News of Thursday, 24 November 2016

Source: B&FT

Auctioning of cocoa loan proceeds to begin this month – Governor

The Governor of the Bank of Ghana, Dr. Abdul Nashiru Issahaku has assured that the central bank will proceed with its auctioning of the Ghana Cocoa Board’s syndicated loan proceeds for the 2016/2017 crop season this month.

According to the governor Dr. Abdul Nashiru Issahaku, this process which could not have come on, was as a result of some technical challenges the central bank faced during the period.

Speaking to journalist in Accra the governor of the Bank of Ghana, Dr. Abdul Nashiru Issahaku who assured of the resolution to the technical challenges faced by the central bank said the bank was now ready to begin the auctioning of the cocoa proceeds this month.

“We have been confronted with some technical challenges and because of that we have not been able to undertake auctioning the proceeds. And we are very careful about the auctioning process but it will be started this month.”

“The auctioning will be started this month,” he stressed.

The Central bank in its September Monetary Policy Committee press briefing hinted that, the bank was going to invite bids to kick start the auctioning of foreign-exchange earned from Ghana’s Cocoa Board syndicated loan proceeds.

The Governor of the Bank of Ghana, Dr. Abdul Nashiru Issahaku at the time explained that the move is to deepen the liberalization of the country’s currency market.

“We want to start in September where the funds will still come to the central bank and we will develop a rule based market driven auction system, where banks would approach the central bank with the demand for foreign exchange and then allocation would be made base on this rule based market driven auction framework,” the Governor remarked.

Although Dr. Issahaku opined that the central bank would not allow the 1.8 billion dollars onto the market at a go, as he contends the current financial market lacks the capability absorb the funds, he assured that the central bank was doing all that it can to deepen the market by building the capacity if the banks to be able to accept the funds.

“But over time, as the market deepens, then the funds can now go straight to the commercials banks as they would have developed the capability to absorb those huge funds directly to the market.”

Dr. Issahaku again maintained, “This is part of the one of the reforms to ensure that just like the receipts from exports of minerals are held, the same principle is applied to export of cocoa receipts which are supposed to be channeled through the commercial banks directly.”

COCOBOD in September 21, signed a 1.8-billion-dollar loan facility for the purchase of cocoa beans for the 2016/2017 crop year which comes with an all-inclusive rate of 1.468 percent.

Under the agreement, COCOBOD is entitled to an extra 200 million dollars from the syndicated banks if the cocoa crop performs better and requires further funds.