When you suspend debt service to external creditors, you increase the country’s risk profile.
This translates into higher future bond coupon rates and lower subscription. And since it is impracticable to repudiate the debt, such a measure only doubles the payment burden in a later date.
Thus, worsening future exchange rates and allied variables.
Postponing the doom’s day is no solution to your problems. Not paying our creditors to have more reserves to support the cedi is simply unsustainable.
It may buy you a few days or weeks of respite and a “miraculously strong cedi”, but that won’t last.
As I have mentioned before, the artificiality of the cedi’s strength will soon be exposed. And the seeming marginal decline of the cedi in the last few days is only an indication of what to expect.
Currencies don’t get strong in a vacuum.
The reversal of the upward cedi trajectory in the last few days is the response of the forex market to the realization of the artificiality I speak about.
Nothing more, nothing less!
Whether someone speaks to that or not, the market is bound to respond the way it has.
And it must be understood that, expressing concerns about the unsustainable “cedi miracle” does not make one unpatriotic, but a citizen as the President would prefer us to be called.
So be a citizen too and quit stigmatizing people with constructive concerns. It does no credit to your own patriotism.
Salaam from the republic of Gambaga.
