The government has been advised to consider a mix of bond and short-term instruments such as commercial paper to finance cocoa purchases.
According to an Associate Professor of Finance at Andrews University, Professor Williams Peprah, this is the best strategy to address the financing challenges in the cocoa industry.
Finance Minister, Dr. Cassiel Ato Forson recently stated that the government was considering raising bonds to finance cocoa purchase.
But speaking to Joy News, Professor Peprah said raising bond is good, but bonds are raised for long term financing.
“If you look at how we buy cocoa in Ghana, it is a yearly process, so the question is, are the bonds going to be raised and repaid within a year. If they are going to be repaid within it is better for us to call it a commercial paper or treasury note, because it falls in what we call in finance as money market transactions”.
He also urged the government to open the bonds to international investors so that the country can benefit from foreign inflows.
“Let’s also think about forex coming in, will the government open these bonds to the international market. Remember, we need the cocoa proceeds to shore up our trading account, which is our current account. If the money we are going to raise is in cedis, then we may have some issues with forex”.
“My advice is that the government must open up this bond to the international market, that is allowing international investors to bring in dollars converted into cedis to purchase the cocoa beans”, he added.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
Source: www.myjoyonline.com
