US$1 Billion Cocoa Financing plan will boost domestic bond market – BoG

The Governor of the Bank of Ghana (BoG), Dr Johnson Pandit Asiama, says cocoa purchases for the 2026/2027 crop season will be financed with $1 billion raised from the local bond market.

He said the model was part of efforts to strengthen the country’s cocoa financing system.

The proposed funding model, which comes amid efforts to revive the cocoa sector after the reduction in farmgate cocoa prices earlier in 2026, is expected to reduce dependence on foreign borrowing and external lenders, while boosting domestic financing capacity.

The initiative is also expected to deepen the local capital market, attract greater participation from institutional investors and strengthen confidence, following the successful resumption of domestic treasury bond issuance earlier this year.

The new financing arrangement would mobilise capital through instruments such as commercial paper and commercial notes, while tapping into domestic liquidity sources.

Opening the 130th meeting of the Monetary Policy Committee (MPC) of BoG at the central bank’s head office, Bank Square, in Accra yesterday, the Governor stated that the new model would mark a major shift in Ghana’s cocoa financing strategy by promoting price stability, sustainable farmer incomes and longer-term government debt management.

“This is a significant shift to reduce reliance on dollar funding and foreign lenders,” he observed.

The 130th MPC

The MPC is the primary decision-making body of the BoG responsible for setting policy rates and managing money supply to achieve price stability and support economic growth.

The 130th MPC meeting, which began yesterday, is expected to conclude on May 20, 2026.

A press conference will be held to announce the committee’s decision on the policy rate will be announced.

The six-member committee is expected to be supported by advisors, experts and key stakeholders, including the Presidential Advisor on the Economy, Seth Terkper, as well as representatives from the Ghana Association of Bankers (GAB) and the Association of Ghana Industries.

The policy rate, which represents the rate at which the central bank lends to universal banks, currently stands at 14 per cent.

Major risks

Dr Asiama identified rising global energy prices and inflationary pressures as major risks likely to influence upcoming monetary policy decisions.

The Governor stated that the prolonged Middle East conflict had triggered sustained increases in global crude oil prices, creating renewed pressure on fuel costs, transportation and consumer prices in the country.

He explained that the convergence of external commodity price shocks and domestic energy supply challenges could weaken inflation control efforts and disrupt the country’s recent macroeconomic gains.

“The committee would carefully assess measures needed to keep inflation expectations anchored while sustaining economic stability and credit growth within the economy,” he said.

Policy trade-offs

Dr Asiama stated that Ghana’s economic conditions had improved meaningfully since the previous MPC meeting in March this year, largely due to sustained reform efforts undertaken over recent years.

However, he explained that the gains were now being tested by a deteriorating external environment, driven mainly by the ongoing Middle East conflict and its impact on global energy and commodity prices.

He stressed that the closure of the Strait of Hormuz had intensified global oil price pressures, with inflationary spillovers already evident across advanced and emerging economies.

The Governor pointed out that those developments had created new policy complexities that required careful balancing of domestic stability gains against external shocks.

IMF engagement

Dr Asiama stated that the country had continued its engagement with the International Monetary Fund (IMF) following the conclusion of the sixth and final review under the Extended Credit Facility (ECF) programme in Accra last Friday.

He said the IMF had acknowledged significant stabilisation gains, including lower inflation, improved external buffers, stronger cedi performance and enhanced debt sustainability.

Despite the gains, the global outlook remained uncertain due to the ongoing Middle East conflict, which was expected to sustain pressure on energy, food and fertiliser prices, Dr Asiama stated.

36-Month PCI

The Governor stated that discussions had progressed towards the 36-month non-financing Policy Coordination Instrument (PCI) which was intended to strengthen reforms, improve policy credibility and reduce dependence on IMF financing, while deepening domestic ownership of the economic programme.

He stressed that the PCI was considered a credible next step in Ghana’s engagement with the international financial architecture, as it preserved the signalling benefits of IMF engagement while reinforcing reform ownership and fiscal discipline.

“Of particular relevance to the Bank of Ghana, the PCI will incorporate commitments relating to the BoG’s monetary policy framework, improve on the transmission mechanism, enhance the liquidity forecasting framework, and maintain conditionality around the inflation targeting regime, with continued emphasis on forward-looking policies and the anchoring of inflation expectations.

“The corridor reform under discussion at this meeting is directly consistent with the PCI’s monetary framework pillar,” Dr Asiama added.

Again, he said, the PCI would also focus on strengthening the BoG’s balance sheet over the medium term by limiting quasi-fiscal activities, improving transparency and oversight of the Domestic Gold Purchase Programme (DGPP).