Eight banks to pay outstanding liability of CASHPRO

The government has directed eight banks to pay 36.1 billion cedis including an interest of 5.8 billion cedis being outstanding liability guaranteed for CASHPRO, a major cocoa purchaser as seed fund to support its 2000/2001 cocoa purchases.

To reduce the effect of the financial burden on the banks, however, COCOBOD is considering restructuring the debt and the Bank of Ghana is mediating a debt settlement arrangement.

Yaw Osafo-Maafo, Minister of Finance said this in answer to a question posed by Mr Kinston Akomeng Kissi, NPP- Akwatia as to the financial implications of the CASHPRO financial crisis on the national economy.

The Minister said at the beginning of the main crop season, CASHPRO like most Licensed Buying Companies (LBC's) applied for and was granted seed fund advances amounting to 93.0 billion cedis by COCOBOD.

He such seed fund advances were normally recovered during the course of the season when cocoa was delivered to COCOBOD and the Cocoa Marketing Company.

Mr Osafo-Maafo said that at the close of the season, CASHPRO was not able to deliver cocoa to cover the value of 30.3 billion cedis with outstanding interest of 5.8 billion cedis.

He said the undelivered cocoa was over 9,300 metric tonnes, which constitutes approximately 2.5 per cent of total 2000/2001 main crop purchases and a third of what CASHPRO should have purchased and delivered to COCOBOD with the seed fund released to it during the season.

Mr Osafo-Maafo said CASHPRO was the second largest purchaser of cocoa after the Produce Buying Company in the internal market in the 2000/2001 main crop season and accounted for 10.7 per cent of the market share. The guaranteeing banks have been notified of the shortfall and arrangements are being made to enable them settle it, he said.

Mr Osafo-Maafo gave the assurance that the absence of CASHPRO from the cocoa purchasing system in the current season has not had any adverse repercussions.

The Minister said indications are that PBC has increased its market share while all the other companies have also increased their purchases leading to the expansion of the network of cocoa purchasing.

He said further to this, at November 6, 2001, COCOBOD had released 376.5 billion cedis as seed funds to LBCs all supported with bank guarantees.

Mr Osafo-Maafo said within the next week, an additional 110 billion cedis seed fund would be released bringing the total to 486.5 billion cedis.

Another 13.6 billion cedis has also been released as re-financing for 3000 metric tonnes of cocoa delivered at the end of the third week for purchases.

Other contributors were Mr Moses Aduko Asaga, NDC- Nabdam, Mr Seidu Paakuna Adamu, NDC - Bibiani and Mr Steve Akorli, NDC - Ho East.