#1Chile: Investor Presentation Gobierno de Chile Ministerio de Hacienda Ministry of Finance November 2020#2Recent Economic Performance Gobierno de Chile Ministerio de Hacienda#31 1.5 2 2.5 3 Estimated COVID-19 Effective Reproduction Number March 17th November 11th 2020. Ministerio de Hacienda - Gobierno de Chile Despite increased mobility, new confirmed cases have remained within a constant range for some time COVID-19 Cases in Chile: New Daily Confirmed Cases People, thousands. March 3rd - November 12th 2020. 8 7 Median 6 65% Interval 5 95% Interval 4 3 2 1.00 0.5 100 90 80 0 70 01 Apr 20 01 May 20 01 Jun 20 01 Jul 20 01 Aug 20 01 Sep 20 01 Oct 20 01 Nov 20 60 50 40 30 20 10 0 Source: Tracking Rt: http://trackingr-env.eba-9muars 8y.us-east-2.elasticbeanstalk.com/ 1 0 3-Mar 10-Mar 17-Mar 24-Mar 31-Mar 7-Apr- 14-Apr 21-Apr 28-Apr- 5-May 12-May 19-May 26-May 2-Jun unr-6 Source: Ministry of Health; https://www.minsal.cl/nuevo-coronavirus-2019-ncov/casos-confirmados-en-chile-covid-19/ Population with Mobility Restrictions People, thousands. March 3rd - November 13th 2020. % of population with restricted mobility (right axis) Stingency Index (left axis)* 16-Jun 23-Jun 30-Jun 7-Jul 14-Jul 21-Jul 28-Jul- 4-Aug 11-Aug 18-Aug 25-Aug 1-Sep 8-Sep 15-Sep 22-Sep 29-Sep 6-Oct 13-Oct 20-Oct 27-Oct 3-Nov 10-Nov 13-Mar 20-Mar 27-Mar 3-Apr 10-Apr 17-Apr 24-Apr 1-May 8-May 15-May 22-May 29-May 5-Jun 12-Jun 19-Jun 26-Jun 3-Jul 10-Jul 17-Jul 24-Jul 31-Jul 7-Aug 14-Aug 21-Aug 28-Aug 4-Sep 11-Sep 18-Sep 25-Sep 2-Oct 9-Oct 16-Oct 23-Oct 30-Oct 6-Nov 13-Nov 0 Source: Hale, Thomas, Noam Angrist, Emily Cameron-Blake, Laura Hallas, Beatriz Kira, Saptarshi Majumdar, Anna Petherick, Toby Phillips, Helen Tatlow, Samuel Webster (2020). Oxford COVID-19 Government Response Tracker, Blavatnik School of Government.; https://www.bsg.ox.ac.uk/research/research-projects/coronavirus-government-response-tracker; and Ministry of Finance. * Data available up to November 3rd, 2020. wwww 10 NO 20 30 40 50 60 13#4-20 -15 -10 -5 0 ene.2019 mar.2019 feb.2019 abr.2019 Source: Central Bank of Chile. 5 Ministerio de Hacienda - Gobierno de Chile Social distancing measures triggered an important decline in economic activity, although the mining sector has been more resilient. National Monthly Economic Activity Proxy (IMACEC) Percent change, year-on-year National Monthly Economic Activity Proxy for Mining and Non-Mining sectors (IMACEC minero y no minero) Percent change, year-on-year may.2019 jun.2019 jul.2019 ago.2019 sep.2019 oct.2019 nov.2019 dic.2019 ene.2020 feb.2020 mar.2020 abr.2020 may.2020 jun.2020 jul.2020 ago.2020 sep.2020 -20 -15 -10 -5 ene.2019 feb.2019 0 5 10 15 شه -Mining -Non-Mining mar.2019 abr.2019 may.2019 jun.2019 jul.2019 ago.2019 sep.2019 oct.2019 nov.2019 dic.2019 ene.2020 feb.2020 mar.2020 abr.2020 may.2020 jun.2020 jul.2020 ago.2020 sep.2020 4#55 9 7 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Ministerio de Hacienda - Gobierno de Chile Unemployment has risen, inflation remains close to the inflation target, while the contraction in exports has stabilized. Unemployment Rate Percent change, year-on-year 17 15 13 11 Exports and Imports of Goods and Services in Nominal Terms Percent change, year-on-year 3mma Exports Imports National Statistics Institute (National) U. Chile (Santiago) 5% Inflation: Headline & Core Percent, year-on-year 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Sep-19 Oct-19 Nov-19 Dec-19 Headline Core Jan-19 Feb-19 Mar-19 Apr-19 Source: Central Bank of Chile, the National Statistics Institute and University of Chile. https://www.ine.cl/estadisticas/sociales/mercado-laboral May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Jan-20 Feb-20 Mar-20 Apr-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 -30% -25% Mar-19 -20% -15% -10% -5% 0% Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 5#6Ministerio de Hacienda - Gobierno de Chile Fiscal policy measures to mitigate the COVID-19 impact on households and firms have mobilized USD25.8 billion (10.6% of GDP) SM INICIO ACERCA DE PROTECCIÓN EMPLEO LIQUIDEZ EMPRESAS INGRESO FAMILIAS SOLIDARIDAD ♥ Measures are transitory in nature, contributing to the fiscal consolidation process thereafter Administrative and legislative initiatives were implemented swiftly Several policies build on existing institutions and mechanisms that have proved effective in the past, such as the state-credit guarantee mechanism (FOGAPE), and the unemployment insurance system Data on the implementation of these measures is readily available on a timely basis: this has facilitated the evaluation and calibration of additional measures Tax-related measures totalling USD3.3 billion during April-June have supported households and firms by postponing and/or suspending tax payments 1.6 million households received a total of USD167 million in cash transfers between April and October Since mid-June and until October, ~3 million households have received a total of ~USD2.8 billion in emergency household incomes Between August 1st and October 31st, over 1.7 million cash transfers for the middle class totalling close to USD1 billion have been paid out; separately over two million requests for loans directly from the Treasury Plan Económico de Emergencia COVID-19: Avances y Cumplimiento Medidas Económicas y Sociales 49 desde inicio COVID-19 Ministerio de Hacienda PROTECCIÓN DE LOS EMPLEOS E INGRESOS LABORALES INYECCIÓN DE LIQUIDEZ PARA APOYAR A LAS EMPRESAS APOYO A LOS INGRESOS DE LAS FAMILIAS Beneficio a Trabajadores Independientes Ley de Protección al Empleo Ampliación de garantías estatales para créditos (FOGAPE) Compra Ágil Bono de Emergencia COVID-19 Fondo Solidario a Municipios Ingreso Familiar de Emergencia Medidas Tributarias - Liquidez Medidas Tributarias - Ingresos de Familias BENEFICIOS CLASE MEDIA Bono Clase Media 6#70 2 4 6 Co 8 10 8-May 15-May 22-May 29-May 5-Jun 12-Jun 12 19-Jun 14 26-Jun 3-Jul ■ Small ■Medium Large ■Very Large Ministerio de Hacienda - Gobierno de Chile Policy measures such as commercial loans with state guarantees support continue to support the flow of credit in the economy FOGAPE: Cumulative Placements through November 6th USD Billion Commercial Loans during Recessions in Chile Cumulative annual percent change with respect to month 0 10-Jul 17-Jul 24-Jul 31-Jul 7-Aug 14-Aug 21-Aug 28-Aug 4-Sep 11-Sep Small (0-25,000UF), Medium (25,000-100,000UF), Large (100,000-600,000UF), Very Large (600,000- 1,000,000UF) Source: Ministry of Finance based on data from the Financial Market Commission. 18-Sep 25-Sep 2-Oct 9-Oct 16-Oct 23-Oct 30-Oct 6-Nov -5 5 10 15 4 3 2 1 0 -10 Asian crisis GFC Covid-19 (without fogape) Source: Central Bank of Chile based on data from the Financial Market Commission*. * Month 0 is the first month with negative IMACEC interanual print. Covid-19 7#80 2 4 6 10 12 Ministerio de Hacienda - Gobierno de Chile Governments have responded decisively with sizable fiscal packages. 20 Above the Line Fiscal Expenditures to face the COVID-19 Shock Across Select Economies Percent of GDP 14 16 18 8,4 8 Canada Japan Australia Singapore New Zealand United States Hong Kong SAR United Kingdom Austria Chile Germany Brazil Thailand Latvia Slovenia Greece Israel Poland Peru Ireland Serbia Norway Denmark South Africa France Sweden Bolivia Luxembourg Croatia Source: Ministry of Finance based on https://www.imf.org/en/Topics/imf-and-covid 19/Fiscal-Policies-Database-in-Response-to-COVID-19. Iran Italy China Lithuania Switzerland Malaysia Czech republic The Netherlands Iceland Hungary Belgium Estonia Argentina El Salvador Spain Korea Guatemala Portugal Panama Indonesia ragua Colombia 8#9Ministerio de Hacienda - Gobierno de Chile The Central Bank of Chile and the Financial Market Commission have actively implemented extraordinary measures . Policy rate cut to 0.5% (technical minimum) . • New Conditional Funding Facility (FCIC): banks have access to 4-year loans at the policy rate (0.5%), with loan size increasing as a function of additional credit to more stressed segments Bank bonds purchase program (USD8 billion) Special assets purchase program (USD8 billion) Term deposit purchase program (USD8 billion) Repo on instruments issued by banks (USD10 billion) Liquidity Credit Line also made available; corporate bonds allowed as eligible collateral in peso liquidity facilities. Adjustments to the peso and USD REPO & FX swap arrangements USD sales program extended until 9/1/21 Transitory adjustments to reserve requirements, relaxation of liquidity requirements for banks Recent legislative adjustments have provided the Central Bank of Chile the ability to purchase Chilean Treasury bonds in the secondary. market, under exceptional and transitory circumstances The IMF approved the Central Bank's 2-year precautionary flexible credit line for US$23.9 billion The Financial Market Commission has also implemented several measures to ensure the proper flow of credit, such as: enhanced monitoring and supervisory activities, modified rules that provide greater flexibility to financial entities to support credit, among others. Source: Central Bank of Chile and Financial Market Commission. 9#10Short-term Outlook Gobierno de Chile Ministerio de Hacienda#110 5 10 20 20 15 22-ene 29-ene 25 30 Ministerio de Hacienda - Gobierno de Chile The main source of global uncertainty is the evolution of the pandemic, including risks of second waves after gradual reopenings New Confirmed Cases (per million) 15-day average 45 45 10 40 35 05-feb 12-feb 19-feb 26-feb Source: CSSE at Johns Hopkins University. China Oceania Africa Asia (excl. China) US (right axis) -Europe (right axis) South America (right axis) 400 04-mar 11-mar 18-mar 25-mar 01-abr 08-abr 15-abr 22-abr 29-abr 06-may 13-may 20-may 27-may 03-jun 10-jun 17-jun 24-jun 01-jul 08-jul 15-jul 22-jul 29-jul 05-ago 12-ago обе-61 26-ago 02-sep 09-sep 16-sep 23-Sep 30-sep 07-oct 14-oct 21-oct 28-oct 04-nov 11-nov 50 350 300 250 200 150 100 11#12Ministerio de Hacienda - Gobierno de Chile The global economy is expected to contract sharply in 2020 and snapback in 2021, while Chile's Terms-of-Trade have improved throughout the year. Real GDP Growth Forecasts Percent year-on-year Year to date change in Future Prices Jan-20100, through October 7th, 2020. 10 8 6 4 2 0 -2 -4 -6 2020 2021 120 110 100 90 90 80 70 60 60 50 10 40 Copper Brent 120 m 110 100 90 80 70 60 50 40 L 30 30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct -10 Brazil China Japan United States World Euro area -8 Source: World Economic Outlook October, 2020, IMF. Source: Bloomberg. 12#13Ministerio de Hacienda - Gobierno de Chile The Ministry of Finance estimates a significant economic recovery during 2021, in line with the estimates of the Central Bank GDP growth Macro Assumptions for 2020-2021 Percent, year-on-year 6 2020 2021 3.9 4 GDP -5.5 5.0 (annual var., %) Domestic demand 2 -7.7 6.5 (annual var., %) Inflation 2.8 2.3 0 (annual var., %) Exchange rate 796 766 -2 ($/US$ average, nominal values) -4 Copper price 270 288 (US$c/lb, average, BML) Source: Ministry of Finance. Public Finance Report 2020 Q3. -6 1.1 -5.5 5.0 -8 2018 2019 2020e 2021f 13#14Ministerio de Hacienda - Gobierno de Chile Fiscal policy will continue to support the economy through 2021. Central Government's Structural and Effective Balance (2010-2025F) Percent of GDP 2 1,3 0,6 0,5 0 -0,5 -0.4 -0,6 -0,5 -1 -1,1 -2 -2,1 -1,6 -2,1 H -1,6 -1,5 -2 -2,7 -2,8 -4 -6 -8 -1,9 -2,8 -2,9 -3,2 -4,3 -3,9 -4,7 -8,2 -0,9 -10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Effective Balance Structural Balance Source: Ministry of Finance. Public Finance Report 2020 Q3. 14#15Ministerio de Hacienda - Gobierno de Chile Revenues and expenditures reflect COVID-19's impact and policy response 30 Central Government's Revenue (1991-2021F) Percent change in real terms 20 10 10 0 aula, י -10 -20 -30 28,2 23,1 -20,4 Central Government's Expenditures (1991-2021F) Percent change in real terms 18 16 18,4 14 12 Jan-20 forecast 10 1,2 16,5 8 6,6 Co 6 -10,6 4 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Source: Ministry of Finance. 2 0 11.4 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Jan-20 forecast: 8.5% 0%.- 15#1620 25 30 Ministerio de Hacienda - Gobierno de Chile Debt has risen, but remains low relative to peers. 35 40 Central Government's Gross Debt Percent of GDP 17.3 15.0 15 12.7 11.9 11.1 10 8.6 5 21.0 Gross Public Debt Forecast for Selected Economies Percent of GDP, 2021 160 In June 2020, gross 36.4 debt reached 32.2% 33.7 140 27.9 25.6 23.6 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e 2021p Source: Ministry of Finance. https://www.hacienda.cl/areas-de-trabajo/finanzas-internacionales/oficina-de-la-deuda-publica/estadisticas 120 100 80 60 40 20 0 Italy Spain Portugal Singapore United States France Israel Canada United Kingdom Brazil Germany Australia Uruguay Finland Dominican Republic Colombia 54.6%, S&P A+ Simple Average* Mexico Ireland Netherlands Indonesia Denmark Peru Chile *Includes Chile, China, and Slovak Republic Source: All forecasts are from the IMF's Fiscal Monitor April 2020, except from Chile which was taken from Public Finance Report 2020 Q3. 36,4 16#17Ministerio de Hacienda - Gobierno de Chile Debt is mostly denominated in local currency, and held by local institutional investors, while sustainable bonds provide access to new investors. Debt Composition by Currency Percent of total Total Assets Managed by Institutional Investors Percent of GDP Strategy Domestic: to develop and lengthen yield curves (nominal and real), while deepening liquidity by fostering greater participation of non-residents •Recent issuances have strengthened new benchmarks and have created longer tenors, extending the debt 100% 7% 15% 6% 4% 80% 60% maturity profile in line with international standards •External: to establish benchmarks for Chilean companies in international capital markets •In addition: to promote the development of a sustainable asset class (sustainable bonds) that attracts foreign investment in support of the country's sustainable infrastructure needs, while diversifying the investor base 83% 40% 20% 68% 140% 38% 120% 100% 122% of GDP (USD 326 bn.) 22% 20% 16% 80% 9% 42% 18% 18% 60% 80% 40% 62% 9% 53% 17% 11% 20% 0% 2002 2010 2019 USD Euros UF □ Pesos □ Other Source: Ministry of Finance. https://www.hacienda.cl/areas-de-trabajo/finanzas-internacionales/oficina- de-la-deuda-publica/estadisticas/composicion-de-la-deuda 2002 2010 2019 Pension Funds Insurance Companies □ Mutual Funds Source: Financial Market Commission 17#18Ministerio de Hacienda - Gobierno de Chile Drafting process for a new constitution and political calendar Constitutional Process Timeline* October 25th, 2020 - National Plebiscite Q1. Do you want a new Constitution? Approve or Reject Q2. What type of body should draft the new Constitution? Mixed Constitutional Convention or Constitutional Convention Approve Constitutional Convention The "approve" option reached 78% of the votes, and the "reject" option met 22%. Also, the option of writing a new constitution through a constitutional convention (79%) was imposed over a mixed convention (21%). The option chosen is characterized by the fact that all of the members belonging to the body that will draft the new constitution shall be elected in April 2021. Adjustments to the Political Calendar Primaries for Mayors & Regional Governors Elections for Municipalities, Regional Governors and Members of the Constitutional Convention Runoff for Regional Governors April 11th, 2021 - Election of Conventional Constituents Some norms and procedures of the Convention... • • A two-thirds majority of the Convention members is needed to approve the text of the new Constitution. The Convention may not intervene or exercise any other function or attribution of other organs or authorities. The Convention dissolves after the new Constitution's text is approved/rejected by its members, or its term expires. April 2022 (≤ 3 months) - Convention delivers Text July 2022 (≤ 3 months) – Plebiscite to Ratify Const. Do you approve the text of the New Constitution proposed by the Convention? Approve or Reject Approve Reject Voluntary participation ✓ Same date as municipal and regional elections Mandatory participation ✓ Simple majority ✓ The text of the New Constitution to be submitted to a plebiscite must be in accordance with the status of Chile as a Republic, its democratic regime, the judicial sentences, and the International treaties ratified by Chile. President ratifies New Constitution. Current Constitution remains 29 Nov 2020 Dec Jan Feb 2021 Mar 11 Apr May 9 Source: Ministry of Finance. 18#19Chile's Sustainable Bond Framework Gobierno de Chile Ministerio de Hacienda#20Ministerio de Hacienda - Gobierno de Chile Sustainable Bond Framework: Expanding Chile's commitment to ESG • • • Sustainable Bond Framework: Green Bond Framework expanded to include Social dimension Demonstrates Chile's commitment to the United Nations Sustainable Development Goals Aligned with: ICMA's Green Bond Principles 2018 Social Bond Principles 2020 Sustainability Bond Guidelines 2018 Second Party Opinion ("SPO") provided by Vigeo Eiris Reporting Policy i. ii. iii. Allocation report: description of the projects included in portfolio, degree of progress, and proportion of refinancing vs. new financing Impact report: Presents the social and/or environmental impact of the projects included in the portfolio, the quantitative performance indicators and the methodology and assumptions underlying the results presented Eligibility report: attests compliance of projects with Sustainable Framework Use of Proceeds Categories: Eligible Expenditure Target Social Demographics: CLEAN TRANSPORTATION ENERGY EFFICIENCY RENEWABLE ENERGY LIVING NATURAL RESOURCES WATER MANAGEMENT GREEN BUILDINGS SUPPORT FOR THE ELDERLY Vulnerable groups Households in poverty Special needs individuals The elderly Human rights abuse victims SUPPORT FOR HUMAN RIGHTS VICTIMS Forms: SUPPORT FOR LOW-INCOME FAMILIES TAX (SUBSIDIES & EXEMPTIONS) REAL ASSETS INVESTMENTS OPERATIONAL EXPENDITURE PUBLIC INFRASTRUCTURE CAPITAL TRANSFERS INTANGIBLE ASSETS JOB CREATION AFFORDABLE HOUSING ACCESS TO EDUCATION FOOD SECURITY ACCESS TO HEALTH SERVICES SUPPORT FOR SMES 20 20#21Ministerio de Hacienda - Gobierno de Chile Social Bonds: Potential Sectors for the Issuance Ministry of Finance New Bonds will potentially include projects such as: • Support for the elderly or people with special needs in vulnerable situation Support for low-income families Support for human rights victims Support for the community through job creation. Access to Affordable Housing. • Access to education Food Security Access to essential health services Social programs designed to prevent and/or alleviate unemployment derived from socio-economic crisis, including through the potential effect of financing SMEs and micro finances Government of Chile Chile's Sustainable Bond Framework November 2020 21 21#22Chile: Investor Presentation Gobierno de Chile Ministerio de Hacienda Ministry of Finance November 2020