The risk of the smallest cocoa harvest in five years is combining with power cuts and a weak oil price to cloud the prospects for Ghana’s debt. Output from the world’s second-biggest producer of the chocolate ingredient may drop 25 per cent from last year, according to Ecobank Transnational Inc.


That’s curbing revenue from the commodity that was the biggest source of Ghana’s foreign exchange in the first quarter. According to Bloomberg Ghana’s Eurobonds lost 1.9 per cent in May, the fourth-biggest retreat after Venezuela, Costa Rica and Gabon among 58 emerging markets.

A drop in cocoa production “adds to the negative backdrop of a depreciating currency, the impact of oil prices on the budget and slowing growth in Ghana,” Kevin Daly, a London-based money manager at Aberdeen Asset Management Plc, who oversees $13 billion in emerging-market debt, said by phone. “A much lower production number is negative for the currency and the budget.”

A fungus outbreak that caused the cocoa shortfall, the worst blackouts in at least eight years, inflation at a four-month high and a currency down 20 percent this year against the dollar are constraining growth in West Africa’s second-biggest economy. The government is forecasting the slowest expansion since 1994 at 3.9 percent this year, while trying to narrow a budget deficit through the help of an International Monetary Fund package signed in April.



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