Economist attributes cocoa price reduction to IMF conditionalities

Economist, Dr Worlanyo Mensah, has attributed the recent reduction in cocoa producer prices to fiscal conditions attached to Ghana’s support programme with the International Monetary Fund (IMF).

Dr Mensah explained that the government’s decision was influenced by policy commitments under the arrangement with the IMF, saying that the organisation expects Ghana to reduce public expenditure and stabilise its finances as part of the conditions tied to the financial facility extended to the country.

He told the Ghana News Agency (GNA) in an interview that the cocoa sector, which remained one of Ghana’s main sources of foreign exchange, could not be isolated from the country’s broader fiscal challenges; hence, the state might be compelled to adjust producer prices to limit financial pressure.

“The IMF has imposed conditionalities on Ghana in pursuance of facilities that they have given, and one of the conditions is that the government needs to reduce costs, its expenditure; so the government has been compelled to reduce cocoa prices drastically even though it is not a laudable idea,” he stated.

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Dr Mensah acknowledged the hardship that brings but maintained that fiscal consolidation often involves difficult trade-offs, explaining that under IMF-supported programmes, governments were typically required to reduce subsidies, rationalise public spending and improve cost recovery in state-owned enterprises.

“The government has the responsibility of educating the farmers, but I think because of political expediency, it is reluctant in communicating this position to the farmers, and the minority is taking its political capital on this, but I think if the government were to tell the farmers the truth, it would be a disadvantage to the minority,” he noted.

He emphasised that IMF programmes were not designed to punish countries but rather to restore economic stability in the long term, adding that these measures were intended to create a more sustainable economy.

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