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Dollar hope for Argentina

Alex Brummer CITY EDITOR

Argentina is the world’s poster child for a failed economy. Blessed with abundant natural resources of grain, shale gas, lithium and a talented population, including a great national football team, it has delivered only disappointment.

at present, the country faces the prospect of its tenth sovereign debt default of modern times, a forecast of 185pc inflation by the end of this year and has witnessed four out of every ten residents falling into poverty.

the populist president-elect Javier Milei has the unenviable task of sorting this lot out. He shouldn’t despair.

With the right policies and governance, countries do come back from the dead as greece demonstrated over the last decade.

Unfortunately for argentina, it lacks the backstop of the european Union to spare it from oblivion, but does have the international Monetary Fund (already owed £36bn) and the inter-american Development Bank to provide funding and advice.

Milei may be regarded as a radical, but his ideas are not without merit.

When your country has a currency as distrusted as the peso, which trades on most exchanges at twice the official price of 350 peso to the dollar, finding an anchor is sensible. Disastrously, el Salvador in central america opted for bitcoin!

Milei wants to adopt the dollar. that may not be as crazy as it seems. Hong Kong’s economic and financial independence from the motherland in Beijing has rested on the dollar link. if the argentine president- elect presses ahead with his plan, it will almost certainly mean a huge devaluation so Buenos aires can align itself with the greenback.

it would simplify the country’s trading relationship with the rest of the world and may keep it out of the clutches of China.

among Milei’s other proposals is to abolish the central bank, presumably allowing interest rates to be set in Washington. Certainly breaking free of a base rate of 133pc would be popular. But like Hong Kong, it is going to need a credible monetary authority if dollar policies are to be pursued.

recent studies show that what the economist magazine labelled as ‘daredevil’ economics can work.

that means reducing the size of the state and liberalisation by removing trade barriers and currency controls. given argentina’s chequered past, it has little to lose.

Food chain

initial reaction to results from the UK’s global catering champion Compass was to mark the shares down.

Yet on most counts, Compass is precisely the kind of innovative multinational which is a credit to the UK service sector.

in the financial year just ended it lifted operating profit by 30pc to £2.12bn in spite of having to wrestle with the last vestiges of working-from-home in its biggest american market. More of the same is promised in 2024, but with less momentum.

it is enjoying rapid growth in the US, which comprises some two-thirds of its turnover. as well as its more mundane work of catering for offices and universities, it has an impressive events franchise. among its achievements was providing food services at america’s Sports equinox when the nFl, the nBa, Major league Soccer and the nHl all held big games on the same evening – October 30. Here in the UK it hosts Wimbledon.

there was some disgruntlement among analysts that chief executive Dominic Blakemore restricted the latest buyback to $500m (£413m). the company’s objective has been to prioritise returning to shareholders the £2bn of rights issue funding that it raised in May 2020 amid lockdowns on both sides of the atlantic. Blakemore is keen to keep some funds behind the clock for future investment and acquisitions.

Better for a £35bn UK group to be a buyer rather than be bought, and to keep its listing firmly rooted in london.

Sporting chance

CriCKet may have conquered afghanistan but so far Saudi arabia isn’t a future World Cup hopeful.

that isn’t cramping its style when it comes to sports investment. advisers to Mohammed bin Salman, not put off by australia’s triumph, have opened talks with india’s Board of Control for Cricket about acquiring a $5bn (£4.1bn) stake in the $30bn (£25bn) indian Premier league.

it will be adding to a portfolio that includes newcastle United, liV golf and the Pga tour, and is tempting heavyweight boxers from las Vegas to riyadh.





dmg media (UK)