ACCRA, March 23 (Reuters) – Ghana's economy is starting to feel the strain of falling cocoa production, central bank data showed. Low exports reduced the trade surplus by more than half in the first two months of the year, threatening the cedi currency.
The world's second-largest cocoa producing country expects production in the 2023/24 season to be almost 40% below target due to a combination of strong winds, little rain, smuggling and disease.
According to the National Statistics Office, growth in the cocoa subsector fell by 1.1% in the last quarter of 2023.
A summary of economic and financial data released by the Bank of Ghana on Friday showed cocoa export revenue fell by almost a third to $508.4 billion in February.
The West African country's trade surplus then fell by 54.5% between February 2023 and February 2024, from $862.5 million to $392.8 million.
The cedi currency has lost more than 8% against the dollar since the start of the year. Ghana's Cocoa Marketing Board did not respond to a request for comment.
Central Bank data showed the country's primary balance was in surplus of 0.4% at the end of 2023.
Since cocoa production peaked in the 2020/21 season, production has been declining and is expected to fall to 580,000 tonnes this season, according to the Cocoa Marketing Board.
In the 2022/23 season, about 150,000 tons of cocoa were lost to smuggling and illegal gold mining, known locally as galamsey, according to the board. Even greater losses are expected this season as rising global cocoa prices encourage smuggling.
The regulator said the cocoa swelling virus, which causes yield losses and kills cocoa trees, has destroyed about 500,000 hectares of farmland.
The challenges in the cocoa sector come as Ghana finds its way out of the worst economic crisis in a generation.
After failing to service much of its external debt in 2022, the government secured a $3 billion loan program from the International Monetary Fund last year and agreed with its official creditors in January to restructure loans worth $3 billion $5.4 billion.
It is now pushing for a deal with international bond holders worth around $13 billion. (Reporting and writing by Maxwell Akalaare Adombila; Editing by Portia Crowe and Christina Fincher)
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