Ivory Coast is aiming to increase more marketing jobs for young workers to be hired right after university and apply their education. Currently, even when young students graduate, their knowledge becomes useless as they are sent back to help their family with farming. There is a lack in the quantity of jobs itself; as agricultural skills become obsolete, Ivory coast is trying to solve this issue by increasing job opportunities for young workers.

Ivory Coast is expecting a harvest shrink of 1/5 from last year. Similar problems are arising in west African countries that also produce cacao beans. According to the article, the main issue is that chocolate companies do not generate enough revenue. Although the pandemic reduced global chocolate demand and created spare capacity of cacao bean stock piles for the last 2 years, the recovery rate is incredibly fast. Two years of having a supply shortage of chocolate has now significantly reduced the available chocolate inventory even after the spare capacity.

Linde and Kalabrt, two companies that import cacao beans from Ivory Coast, has observed their sales go down, as higher prices of chocolate now incentivize consumers to hold back on their consumption. Ivory coast’s domestic economy is also weakening as their main exports are lower.

This indicates that the Central Bank of West African States (BCEAO), of which Ivory Coast is a member, recently tightened its monetary policy by raising the benchmark interest rate to 5.50%. This rate hike led to increased financing costs for Ivory Coast's government.

The interest rate increase was likely implemented to combat rising inflation in the region. Inflation in Ivory Coast rose from 4.2% in 2021 to 5.2% in 2022, exceeding the 3% target set by the West African Economic and Monetary Union (WAEMU).By raising interest rates, the BCEAO aims to rein in inflation and maintain price stability across the WAEMU member countries, including Ivory Coast. Higher interest rates make borrowing more expensive, which can help cool demand-driven inflationary pressures.

Higher interest rates, and thus higher borrowing rates, leads to lower investment in firms and consumption (savings) in consumers. Both decreases AD, shifting the AD curve to the left. This causes output to decrease from inflationary Y₁ to Y_p, potential output, and decreases price level from PL₁ to PL₂. However, unemployment will rise at the lower output.

Ivory Coast agreed to a $3.5 billion extended fund facility and extended credit facility with the IMF in May 2023. One of the key pillars of this IMF program is upfront domestic revenue mobilization, which involves ending certain subsidies and tax exemptions to boost government revenue. By removing the tax incentive that allowed cocoa grinders to pay lower excise duties between 13.2% and 0%, and instead requiring them to pay the full 14.6% tax rate, Ivory Coast is aligning its fiscal policy with the IMF's conditions for the loan program.

Consequences:

• The removal of the tax incentive contributes to fiscal consolidation efforts by increasing government revenue. This aligns with the IMF program's goal of reducing the budget deficit to 3% of GDP by 2025 and stabilizing public debt below 60% of GDP.

• The removed tax burden on cocoa grinders may translate into lower prices for cocoa products, contributing to deflationary pressures in the economy. This could potentially affect Ivory Coast's goal of increasing domestic cocoa processing capacity and capturing more value from the cocoa value chain.

• While the policy aims to improve fiscal sustainability, it may impact the cash flows and investment capacity of cocoa grinders, which are predominantly foreign companies.