JOHANNESBURG: Ratings agency Moody’s moved South Africa one step closer to “junk” status on Friday by revising the outlook on the country’s last investment-grade credit rating to “negative” because of a slowdown in economic growth and rising debt burden.
Analysts had expected the outlook revision on the ‘Baa3’ rating, the lowest rung of investment grade, after a bleak mid-term budget statement this week that slashed this year’s growth forecast to 0.5% and showed government debt racing to more than 70% of gross domestic product by 2023.
S&P Global and Fitch already have South Africa’s debt in sub-investment grade.
“The negative outlook signals in part Moody’s rising concern that the government will not find the political capital to implement the range of measures it intends, and that its plans will be largely ineffective in lifting growth,” Moody’s said in a statement after South African financial markets had closed.
“The development of a credible fiscal strategy to contain the rise in debt, including in the 2020 budget process and statement, will be crucial to sustain the rating at its current level,” the agency added.
The negative outlook means there is a window of 12-18 months in which a downgrade could be delivered.
A move to “junk status” typically increases a government’s cost of borrowing by raising the premium that investors demand to hold its debt.
A downgrade to sub-investment grade could also see South Africa evicted from the benchmark World Government Bond Index of local currency debt, which could trigger billions of dollars of passive outflows.
Phoenix Kalen, director of emerging markets strategy at Societe Generale, said South Africa was now in the “last-chance saloon” and that it had to stabilize its debt trajectory.
“This will be a Herculean task,” Kalen said, citing financial pressures at state-owned companies among causes for concern.
The South African government has been forced into repeated bailouts of state companies such as struggling power firm Eskom, which is due to receive more than 100 billion rand ($6.65 billion) of state money over the next two fiscal years.
Moody’s moves South Africa one step closer to ‘junk’ status
Moody’s moves South Africa one step closer to ‘junk’ status
Saudi POS spending jumps 28% in final week of Jan: SAMA
RIYADH: Saudi Arabia’s point-of-sale spending climbed sharply in the final week of January, rising nearly 28 percent from the previous week as consumer outlays increased across almost all sectors.
POS transactions reached SR16 billion ($4.27 billion) in the week ending Jan. 31, up 27.8 percent week on week, according to the Saudi Central Bank. Transaction volumes rose 16.5 percent to 248.8 million, reflecting stronger retail and service activity.
Spending on jewelry saw the biggest uptick at 55.5 percent to SR613.69 million, followed by laundry services which saw a 44.4 percent increase to SR62.83 million.
Expenditure on personal care rose 29.1 percent, while outlays on books and stationery increased 5.1 percent. Hotel spending climbed 7.4 percent to SR377.1 million.
Further gains were recorded across other categories. Spending in pharmacies and medical supplies rose 33.4 percent to SR259.19 million, while medical services increased 13.7 percent to SR515.44 million.
Food and beverage spending surged 38.6 percent to SR2.6 billion, accounting for the largest share of total POS value. Restaurants and cafes followed with a 20.4 percent increase to SR1.81 billion. Apparel and clothing spending rose 35.4 percent to SR1.33 billion, representing the third-largest share during the week.
The Kingdom’s key urban centers mirrored the national surge. Riyadh, which accounted for the largest share of total POS spending, saw a 22 percent rise to SR5.44 billion from SR4.46 billion the previous week. The number of transactions in the capital reached 78.6 million, up 13.8 percent week on week.
In Jeddah, transaction values increased 23.7 percent to SR2.16 billion, while Dammam reported a 22.2 percent rise to SR783.06 million.
POS data, tracked weekly by SAMA, provides an indicator of consumer spending trends and the ongoing growth of digital payments in Saudi Arabia.
The data also highlights the expanding reach of POS infrastructure, extending beyond major retail hubs to smaller cities and service sectors, supporting broader digital inclusion initiatives.
The growth of digital payment technologies aligns with Saudi Arabia’s Vision 2030 objectives, promoting electronic transactions and contributing to the Kingdom’s broader digital economy.
