Associate Professor of Finance at Andrews University, Michigan, USA, Professor Williams Peprah has described President Akufo-Addo’s comment that Ghana is not broke as untrue, saying, technically the country is broke.

According to him, the country’s failure to repay its loans, adopt austerity measures and the need to seek international assistance to restore its economic stability are reasons indicating the economy is broke.

President Akufo-Addo during the State of the Nation’s Address pointed out that the country was not broke, adding that his government is handing over the country to the incoming President John Mahama’s government with Gross International Reserves of US$8 billion, compared to the US$2.5 billion handed over in 2017.

However, speaking on Joy News, Professor Peprah, said Ghana faced these challenges in 2024, so the outgoing President cannot say the economy is not broke.

“Let me say that the president's statement is inaccurate. This report pertains to 2024, so the president must address the financial realities of 2024 based on the available data”.

“I’ll start with the technical definition of a country being 'broke.' It simply means that a country cannot meet its domestic and external financial obligations, lose access to international credit markets, and faces severe economic challenges. Additional indicators include austerity measures, debt restructuring, and the need to seek international assistance to restore stability. By this definition, Ghana faced these challenges in 2024”, he stressed.

He further stated that the announcement by the government in December 2023 that it would not pay its debt is effectively a default.

Professor Peprah however stated that if the government begins paying its loans from tomorrow then the country is not broke.

“In 2024, we underwent debt restructuring and are scheduled to start repaying loans tomorrow. If we successfully make the $346 million coupon payment tomorrow, as stated by the president, then Ghana can no longer be considered 'broke. However, for the period covered by this statement, Ghana was broke”.

The president also claimed that he is handing over Gross International Reserves of US$8 billion, compared to US$2.5 billion in 2017.

However, Professor Peprah said finance and economics professionals focus on the Net International Reserves, which currently stand at approximately $4.92 billion

Ghana is presently classified as a country in high debt distress.

For context, when the NPP government assumed office in 2016, Ghana’s debt-to-GDP ratio was 56.8%. By 2024, this ratio has increased to 74.6%, reflecting a higher debt burden compared to 2016.