#1牛 2ARDAL RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency SLOVAK REPUBLIC Investor Presentation February 2023#2Table of contents 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency II Introduction Economic Developments р. 3 p. 10 IV = ≥ III Fiscal Policy p. 22 Debt Management p. 26 V Contemplated Transaction p. 39#3Introduction 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 3#4Slovakia - At a Glance Geographical Location OECD NATO ΟΤΑΝ Sammy Slovakia European Union (Euro Zone members) European Union (Non Euro Zone members) Key Facts 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Ratings (Moody's/S&P/Fitch) GDP (2022) GNI per capita (2021) Population (2022) Real GDP growth (2022) Inflation (HICP - 2022) Currency Key economic sectors Memberships Head of State Capital A2 (negative) / A+ (negative)/A (negative) €107.8 billion €22.280 5.4 million 1.7% 12.1% EUR Services, Manufacturing, Wholesale & Retail Trade, Construction OECD, EU, EMU, NATO, Schengen Area President Mrs. Zuzana Čaputová Bratislava Territory 49,034 km² Source: Eurostat, Ministry of Finance of the Slovak Republic (MoF), National Bank of Slovakia (NBS) H 4 st#5Slovakia - Credit Strengths 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Strengths Credit キ Resilient Economic Growth Sound Fundamentals Fiscal Discipline Steady Debt Dynamics • Strong track record of economic growth and high GDP per capita: compares well relative to EU peers Moderate economic downturn in pandemic: -3.4% in 2020 vs. -6.1% for euro area in real GDP terms and solid post-pandemic growth prospects An export-oriented performer with balanced external accounts: moderate current account deficits explained by investment imports Well capitalized banking sector profitable with good asset quality Approved multi-annual expenditure ceilings: fundamental fiscal reform outlining medium-term objectives for 2023-2025 Budget targets deficit to decline close to 3% of GDP in 2025 Public debt stabilized under 60% of GDP, still well below the Euro Area average High debt affordability: interest costs around 1.2% of GDP up to 2025 Export Oriented Competitive export sectors with high value niches in key industrial sectors (motor vehicles, machinery, equipment, metal products, electronics, etc.) Member of Key Political and Economic Organizations EU and Eurozone membership: supports Slovakia's institutional strength and credible macroeconomic policies 牛 5 Source: Moody's, IMF#6Ratings Reflect a Solid Profile in Turbulent Times 2ARDAL 2003 Agentura pre riadenie dlhu a likvidity. 2023 Deb and Liquidity Management Agency Rating Trajectory Highlights and Key Topics • • Solid economic growth over recent years has facilitated the country income convergence to its EU peers while maintaining a relatively moderate debt burden and high debt affordability. Such characteristics together with Slovakia's historical financial stability and expected EU programmes funding have supported current credit rating, A/A2/A However, its high reliance on Russian energy imports is increasing the country vulnerability to geopolitical risk, which has driven to an outlook revision to negative in recent months. Slovakia's outlook could be upgraded to positive if the concerns over energy supply are alleviated. Slovakia's reform plans to diversify energy supply will help this Sovereign Ratings Trajectory 2016-23 (S&P, Moody's, Fitch) AA-/Aa3/AA- A+/A1/A+ A/A2/A A-/A2/A- BBB+/Baa1/BBB+ BBB/Baa2/BBB Fitch Moody's S&P BBB-/Baa3/BBB- 2016 2017 2018 2019 2020 2021 2022 2023 Credit Rating Agency Views S&P Global Ratings Credit rating has remained stable between 2016 and 2022 о о Slovak Republic's credit rating was reafirmed by the agency while its Outlook was revised to negative in May 2022 November 2022: We expect high inflation, the slowdown in the eurozone, and persisting supply chain bottlenecks will harm economic activity in Slovakia so that real economic growth slows to 0.4% in 2023 At the same time, we consider Slovakia's fiscal and external debt levels to be moderate, and its debt service costs remain historically low MOODY'S Credit rating has remained stable between 2016 and 2022 ○ о Credit rating of A2 was recently reafimed in August 2022 with its Outlook updated to negative August 2022: The country public finances could be materially impacted by a permanent reduction on gas supply form Russia takes place Neverheless, Slovakia's credit rating reafirmation reflects the country solid economic strenght, solid fiscal metrics and relatively moderate exposure to event risks A clear and succesful energy supply diversification strategy would support an improvement on its Credit Rating Outlook Fitch Ratings Credit rating was downgraded 1 time between 2016 and 2022 Credit rating of A+ was downgraded to A in May 2020 and recently reafirmed in August 2022 with a negative Outlook May 2020: One notch downgrade from A+ to A. Increasing economic uncertanty driven by the impact of the Covid-19 pandemic August 2022: Credit rating was reafirmed, but Outlook was revised to negative. Main driver for such revision was the foreseeable adverse shock from energy supply challenges 6 Source: Moody's, S&P and Fitch#7Slovakia's Resilience to Russia/Ukraine Developments 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 1 The Slovakian economy is forecasted to grow despite the war in Ukraine While Russia's aggression in Ukraine has given rise to challenges for Slovakia's economy, the country is forecasted to nevertheless achieve positive economic growth in the coming years 2 Slovakia has reduced its dependency on Russian energy imports Since the inception of the Russian invasion of Ukraine, the Slovak Republic has reduced its energy dependence on Russia dramatically The share of energy imports from Russia has declined to roughly 43% from 70% at the beginning of 2022 Real GDP Growth & Forecasts (%) 4,0% 90% 3,0% 76% 1,7% 70% 2,0% 1,3% ¦ 1,8% 50% 0,0% 2021 2022 2023E Share of Energy Imports from Russia (%) 65% Russian invasion of Ukraine ! 43% 2024E 30% 1.21 3.21 5.21 7.21 9.21 11.21 1.22 3.22 5.22 7.22 9.22 Real GDP Growth (in %) 3 Slovakia's status as an NATO and EU member-state represents 4 Slovakia's overall trade is overwhelmingly EU-focused a strong security guarantee Share of Total Imports/Exports (%, 2021) 80% 72% Slovakian defence policy is pursued through the joint efforts of the Slovak Armed Forces and NATO/EU allies. As a member of NATO and the EU since 2004, Slovakia has the following security guarantees in place: 67% 70% 60% 50% OTAN NATO Article 5: By focusing on NATO's deterrence and defence efforts, Slovakia works with Allies to be able to deter more effectively and, if necessary, to defend with all the means and capabilities needed to do so 40% 30% 20% 7% EU Mutual Defence Clause: This binding clause provided that if an EU country is the victim of armed aggression on its territory, the other EU countries have an obligation to aid and assist it by all the means in their power 6% 10% 3% 4% 2% 1% 1% 3% 1%1% 0%0% 0% EU China Russia United United Ukraine Belarus Kingdom States H 7 Imports Exports Sources: Statistical Office of the Slovak Republic - All figures are rounded#850% 40% 30% 20% 10% 0% -10% -20% 2021 Government Fights Inflation The government has delivered the aid package for households and firms to cope with high energy prices Thanks to the aid the inflation will fall gradually over the years to come Expected price increases of energies 16% الية 14% 12% 10% 8% 6% 4% 2% 0% 2022 2023 ■Electricity Gas Heat 2024 2025 キ 8 2021 2022 2023 Inflation forecast 2024 Inflation Forecast February 2023 Inflation Forecast September 2022 2025 Source: Ministry of Finance of Slovak Republic 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency#9Mitigating Impacts from the Energy Market Disruption Allocated budgetary energy measures for 2023 Measure 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Energy Package in more detail Measures targeted at households (1.8% of GDP) include (w/o VAT): ✓ Regulated annual increase of gas prices (max 15%) and heating prices (max 20%) ✓ Cap on electricity distribution fees and system charges • Implementation Timeline Budgetary Cost (%GDP) Cap on gas supply prices Jan'23 1.2 (households) Price caps for electricity Jan'23 0.3 distributors (households) Cap on heating supply prices (households) Jan'23 0.3 Capped electricity and gas prices for regulated small companies Jan'23 0.2 Capped electricity and gas prices for unregulated companies Dec'22 0.1 キ 19 Reimbursements of costs above €199 price of electricity and €99 of gas for companies (0.3% of GDP): 100% for regulated small and medium firms ✓ 80% for unregulated companies Source: Ministry of Finance#1024RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency II Economic developments 10 10#11Transformational Success Story ✓ Sustainable and robust GDP growth Commitment to fiscal discipline ✓ High share of investment to GDP ✓ Export-oriented economy 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency SLOVAKIA Real GDP Growth (in %) Private Consumption Public Consumption Gross fixed capital formation 2017 2018 2019 2020 2021 2022 2023e 2.9 4.0 2.5 (3.4) 3.0 1.7 1.3 4.7 4.2 2.6 (1.2) 1.6 4.6 0.7 1.1 0.5 4.5 (0.6) 4.2 (2.5) 2.3 2.9 2.8 6.7 (10.8) 0.2 6.6 160 14.6 Exports (goods and services) 3.7 5.1 0.8 (6.4) 10.6 0.3 1.3 Imports (goods and services) 4.1 4.8 2.2 (8.2) 12.1 1.1 4.2 GNI (real growth p.c. in %, adjusted by GDP deflator) 3.8 4.3 1.7 (2.2) 3.0 1.9 0.7 Employment Growth (% p.a.) 2.2 2.0 1.0 (1.9) (0.6) 1.6 0.5 Unemployment rate (% of labour Force) 8.1 6.5 5.7 6.7 6.8 6.2 5.8 Inflation (HICP) (% p.a.) 1.4 2.5 2.8 2.0 2.8 12.1 9.7 General government balance (% of GDP) (1.0) (1.0) (1.2) (5.4) (5.5) (5.0)* (6.4)** * General government balance estimate from Draft Budgetary Plan of the SR (October 2022). ** Budget 2023 estimate including energy one-off measures of 2.5% of GDP. Sources: Eurostat, SO SR, MOF February 2023 Forecast, EC for GNI in current prices per head of population. * 11#12Slovakia - A Solid Performer among Eurozone Countries 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Slovakia is one of a few EU countries that have already received proceeds from RRP The war in Ukraine and the energy crisis is a headwind but competitive external sector, resilient labour market and industrial production supported by drawing from EU funds and RRP suggest a solid growth potential Convergence is almost complete for the unemployment and inflation rates Slovakia's Public Debt to GDP level still more than 30 p.p. below the Euro Area average (2022) Real GDP growth (%) Inflation- HICP (%) Unemployment rate (%) Current Account Balance (% of GDP) Budget Balance (% of GDP) Structural Budget Balance (% of pot. GDP) General Government Gross Debt (% of GDP) 2021 Slovakia 2022 Belgium 2021 2022 Finland Eurozone 2021 2022 2021 2022 3.0 1.7* 6.1 2.8 3.0 2.3 5.3 3.2 2.8 12.1* 3.2 10.4 2.1 7.2 2.6 8.5 6.8 6.2* 6.3 5.8 7.7 7.0 7.7 6.8 (2.5) (4.9) 0.4 (2.7) 0.6 (0.2) 2.3 1.5 (5.5) (5.0)** (5.6) (5.2) (2.7) (1.4) (5.1) (3.5) (5.3) (4.3) (5.2) (5.5) (2.1) (1.1) (4.2) (3.6) 62.2 + 58.6** 109.2 106.2 72.4 70.8 97.1 93.6 Source: Eurostat, EC Autumn Forecast 2022, *MoF February 2023 Forecast, **Draft Budgetary Plan of the Slovak Republic for 2023 12#13130 125 120 115 110 105 100 95 90 Strong Productivity and GDP Growth 2010=100 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Slovakia's real labour productivity and GDP per capita have consistently grown faster compared to peers Real labor productivity per hour worked GDP per capita (chain-linked volumes) 2007 2008 2009 Slovakia 2010 2011 -Finland 2012 2013 2014 Belgium 2015 2016 2017 2018 2019 2020 2021 Euro area (19 countries) キ 13 130 125 120 115 110 105 100 95 90 2010-100 2007 2008 Slovakia 2009 2010 2011 Finland 2012 2013 2014 Belgium 2015 2016 2017 Euro area (19 countries) 2018 2019 2020 2021 Source: Eurostat#14Ongoing Economic Convergence to EU28 140,0 Nations that converged closer to EU DK NL 120,0 SE BE DAT 100,0 MT UK FR EU LT EE IT CZ ◆ CY Slovakia ཁྐྲ༣ ES 80,0 PL ♦ LV ко ◆ HU PT HR EL 60,0 BG GDP per capita in PPS EU28=100 (2021) 40,0 20,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0 GDP per capita in PPS EU28=100 (1995) + 14 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Successful transformation to market economy Fast speed of convergence: 25% in 25 years Current level: 69% of the EU27 GDP per capita (2021) Source: Eurostat#1518,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2005 2006 Resilient Unemployment Rate ✓ The unemployment rate reached historical minimum in 2019 However, the pandemic caused an increase in unemployment, in line with euro area peers Unemployment Evolution versus Peers 2007 2008 2009 Belgium 2010 2011 2012 2013 2014 2015 Slovakia Euro area - 19 countries (from 2015) キ 15 2016 2017 2018 Finland 2019 2020 2021 2022 Source: Eurostat, MoF February 2023 Forecast, EC Autumn Forecast 2022 5.8 6.8 6.2 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency#16War refugees can support the Slovak labor market 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency ✓ Since the beginning of the war, 105,000 Ukrainian refugees, mostly women and children, have applied for temporary refugee status in Slovakia. ✓ So far, 25% of 18-64 year olds have found a job. Refugees mainly occupy low-skilled positions in manufacturing and services, and their inclusion represents a positive risk for the Slovak labour market. 91 84 77 70 63 56 49 21 14 52258 2270 42 35 Age distribution of Ukrainian refugees 2000 1500 1000 500 Women Men 0 キ 16 500 1000 1500 2000 Source: Ministry of Interior of the SR#17Key Trading Partners in 2021 Imports By Geography (%) 19% 24% 1% 1% 2% 2% 3% 3% 3% 4% 6% 5% 5% 6% ■Germany ■ Czechia ■China Exports By Geography (%) 15% 22% ■Russia Poland 1% 2% Korea 2% ■ Vietnam 2% 2% 10% ■ Hungary 3% ■ France 3% ■ Italy 4% 7% ■ Austria ■ Romania 5% 8% ■ Spain 6% 7% 6% ■United Kingdom ■Netherlands ■ Other キ 17 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 12% ■Germany ■ Czechia ■ Poland ■ Hungary ■France Austria ■ Italy ■United Kingdom ■ United States ■ China ■ Romania ■ Spain ■Netherlands ■ Russia ■ Switzerland ■ Other Source: Statistical Office of the Slovak Republic#18Key Export and Import Products in 2021 6% 10% 8% 10% Imports by Product (%) 33% ■Machinery, electrical equipment ■ Vehicles ■ Base metals and articles of base metal ■Mineral products ■ Products of the chemical industries Plastics and articles thereof ■ Prepared foodstuffs; beverages tobacco ■Miscellaneous manufactured articles 16% ■ Textiles and textile articles ■ Optical ■ Other 5% 11% 7% Exports by Product (%) 29% 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 33% ■ Vehicles ■Machinery, electrical equipment ■■Base metals and articles of base metal ■ Plastics and articles thereof ■Mineral products ■Miscellaneous manufactured articles ■Products of the chemical industries ■Textiles and textile articles ■ Prepared foodstuffs; beverages; tobacco ■Paper, cellulose ■ Other キ 18 Source: Statistical Office of the Slovak Republic#19EU Recovery and Resilience Plan (RRP) Kicks in 2AR RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency RRP contributions to Slovakia's expected GDP growth Preliminary plan of allocating RRP resources (EUR million) 3,0% 2022 2023 2024 2025 2026 2,5% RRP 49 1,647 2,394 1,817 334 2,0% Public investment 11 904 1,633 1,209 128 1,5% 1,0% 16 Compensations 122 106 97 31 0,5% Intermediate 4 86 89 56 20 0,0% consumption -0,5% Soc. Transfer in kind 2 7 7 3 0 -1,0% Social transfers 0 24 24 24 0 -1,5% GFCG firms 1 325 422 316 75 2022 2023 2024 2025 2026 2027 other factors RRP contribution GFCG households 16 179 112 112 80 RRP is expected to boost the economy mainly in 2023 and 2024 • • • Slovakia will be a key beneficiary of the Recovery and Resilience Facility, boosting its productivity and accelerating the green and digital transformation. Public investment funded by the RRP will support the output by approx. EUR 1 billion in 2023 and EUR 1.6 billion in 2024 Slovakia has already received more than EUR 458 million with the first tranche of funds while the second tranche of amount approx. EUR 815 million has been approved + 19 Source: Government Office of the Slovak Republic, MoF#20EU Recovery and Resilience Plan (RRP) Kicks in Area Component Resources (million)* Total Renewable energy sources and energy infrastructure 232 Building renovation 2AR RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dob and Liquidity Management Agency 741 Green Economy Sustainable transport Decarbonisation of industry 801 EUR 2,301 million 368 Climate change adaptation 159 Availability, development and quality of inclusive education 210 Education Education for the 21st century 469 EUR 892 million Improvement of universities' performance 213 Science, research, Effective management, higher financing for science, research, innovation and digital economy 633 EUR 739 million innovation Attraction and retentions of talents 106 Modern and accessible healthcare 1,163 Health Mental healthcare 105 EUR 1,533 million Long-term care 265 Improved business environment 11 Judicial system reform 255 Effective public administration Anti-corruption and ani-money laundering measures, safety and security of inhabitants 229 EUR 1,110 million Digital Slovakia 615 Sound public finance H 20 Source: Government Office of the Slovak Republic *The amounts are based on current prices; final investments may differ from the estimated expenditures#21Structural Reforms for Long-Term Development 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency The Slovak government remains committed and continues to implement structural reforms to boost competitiveness and quality of life for the country. EU Recovery and Resilience Plan Investment plans from 2021-2026 in Slovakia will focus on the following 5 key structural areas: Better education Healthy life Effective public administration and digitalization Green economy Competitive and innovative economy Slovakia is the fifth EU member state to be granted approval by the EC for its Recovery and Resilience Plan. Improving Tax Collection and Combating Tax Evasion VAT gap continued its downward trend in 2021 and closed the year at 12.1% It decreased further in 2022 due to these reasons: Increased amount of cashless payments in the sectors with the high VAT gap Introduction of online cash registers and online invoice system to be introduced soon Value for Money (VfM) Initiative Government initiative to raise public spending efficiency (started in 2016) Compulsory spending reviews of at least 50% of government expenditures within the electoral cycle Reinforced the Ministry of Finance mandate in 2020: Strengthening the role of the VfM Unit in the investment process and managing the investment centralized budget Efficiency check of investment projects exceeding € 1mn Strengthened fiscal framework Multi-annual expenditure ceilings as a new operational fiscal rule (approved and implemented in 2023) Refinements of Constitutional Act on Fiscal Responsibility (under political discussion) • • Recalibrations of debt thresholds, escape clauses, and respective sanctions Net debt basis to provide flexible liquidity management Stronger emphasis on analytical input into the budgetary process (under discussion) キ 21#22III Fiscal Policy 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 22 22#23Prudent Fiscal Policy to be Reintroduced in 2024 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency ✓ After outbreak of COVID-19 pandemic in 2020, Slovakia ran a lower deficit comparing to peer countries However COVID-19 deteriorated budget deficits in period 2020-2022 particularly by economic downturn and fiscal stimulus of around 6% of GDP cumulatively Second shock came with conflict in Ukraine and energy crisis, expecting energy one-off stimulus in 2023 (2.5% of GDP) with deficit at 6.4% of GDP In 2023 the Parliament approved expenditure ceilings for 2023-2025, reflecting space for one-off energy measures in 2023, ceilings will require fiscal adjustment as from 2024 General Government Balance % of GDP 0,0 -2,0 -4,0 -6,0 -8,0 ■ Euro Area -10,0 2009 2010 2011 2012 2013 EU Government budget deficit rule (-3% of GDP) ■Belgium Finland ◆ Slovakia 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F キ 23 Source: Eurostat, EC Autumn forecast 2022#24Government's Objective to Stabilize Post-Pandemic Debt 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency Outbreak of COVID-19 in 2020 elevated public debt by almost 11% of GDP (however one of the main driver was temporary accumulation of cash buffer due to uncertainty) Debt will decline and stabilize below 60% of GDP in following years mostly due to nominal GDP growth The medium-term consolidation strategy reflecting expenditure ceilings will lead to further stabilization of the debt level below 60% GDP and well below peer countries 180 160 Projected Public Debt-to-GDP Ratio 2024 2023 80 60 60 2880 140 120 100 220 40 20 57,4 108,6 73,3 0 EE LU IE LV LT NL SK MT DE HR SI FI AT CY PT BE キ 24 FR ES IT EL Source: EC Autumn forecast 2022#25The Main Fiscal Reform of Managing Public Finance 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency In 2023 the Parliament approved ceilings on public expenditure for 2023-2025 The ceilings now serve as a main operation tool to achieve long-term fiscal sustainability starting from 2023 and thereafter for whole election period as from 2024 ✓ Calculation of expenditure limits is based on risks of long-term sustainability indicator and executed and updated by independent Council for Budget Responsibility ✓ Required structural consolidation of 0.5% of GDP in case of high/medium risks and 0.25% in case of low risks Expenditure ceilings incorporate escape clauses that can be triggered in circumstances of economic downturn of 0% or -3%, or one-off measures related to extraordinary events ✓ ✓ Ceilings are also tied to EU general escape clause (still active in 2023) Amendment of debt brake rule that would strengthen operationalization of the framework waiting for final approval by Parliament ✓ Main changes come with substituting indicator from gross to net debt Rationalizing of sanctions while enhancing their enforcement ✓ Modification of escape clauses to ensure flexibility キ 25#26IV Debt Management 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 28#27Debt Management in 2022 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency Gross issuance originally planned at EUR 6.0 billion Positive development in State budget deficit mostly due to elevated revenues from inflation - actual deficit of EUR 4.5 billion lower than budgeted EUR 5.5 billion ✓ Gross issuance at lower level than planned Substantial cash buffer Issued EUR 5.2 billion bonds EUR 1.0 billion - syndicated transaction in October - 10y benchmark EUR 4.2 billion via regular auctions Loans received in amount of EUR 0.1 billion ✓ One tranche of EIB loan Buybacks at the end of 2022 The goal is to decrease the redemption amounts in the next year and invest cash buffer with no credit risk Willingness of investors to sell was very limited - investors prefer to hold till maturity キ 27 Source: Ardal as of December 2022#28Debt Management in 2022 (cont'd) Total redemptions EUR 1.3 billion equivalent EUR 1.16 billion equivalent bond matured in May 2022 (USD 1.5 billion) EUR 0.14 billion equivalent bond matured in April 2022 (CHF 0.175 billion) Bond auctions stable on third Monday of each month except July, August & December Four bonds offered in all auctions Special auction of 2068 bond with remuneration in June - followed investor demand 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency Financing still relatively cheap and manageable Weighted average yield at 2.43% p.a. (new issuance); weighted average maturity 12.1 years (new issuance) ✓ Average yield of outstanding bond portfolio as of December 2022 at 1.66% p.a. (1.31% p.a. including State treasury funds) Strong presence of ECB ECB holds more than 40% of issued government bonds Continuing reinvestments – announced decrease in reinvestments but no binding timeline for any of the two programs キ 28 Source: Ardal as of December 2022#29Debt Management Outlook in 2023 2AR RDAL 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency Total redemptions EUR 4.6 billion equivalent EUR 3.0 billion - bond maturing in February EUR 1.5 billion - bond maturing in November EUR 0.14 billion equivalent - CHF 0.175 billion bond maturing in October Uncertainty about state budget cash deficit ✓ Cash deficit of state budget at EUR 8.3 billion (worst case and very unlikely scenario according to ARDAL) Total gross financing needs formally at EUR 12.9 billion and will be covered mostly by issuance EUR 4.0 billion can be issued via regular monthly auctions EUR 4.0 billion can be issued via syndications No T-bills No specific loans planned but could be arranged based on market conditions ✓ Total issuance planned at EUR 8.0 billion – the rest can be covered by State Treasury funds development + liquidity buffer optimization + realistic deficit compared to estimates Foreign currency issuances are less likely Focus to remain on Euro-denominated SLOVGB issuance. キ Source: Ardal as of December 2022 29 29#30Bond Redemption Profile ✓ Smooth redemption profile not exceeding EUR 6.5 billion redemption in any single year EUR 4.6 billion maturing in 2023 (out of that amount EUR 100 million already bought back) Slovakia Bond Redemptions EUR bln 7,0 6,5 6,0 5,5 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 00 0,0 24R RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency 2067 2065 2063 2043 2049 2047 2045 2041 2039 2037 H 30 Available additional amount to be sold through auctions and syndicate 2061 2059 2057 2055 2053 Source: ARDAL, data as of December 2022 2051 2035 2033 2031 2029 2027 2025 Maturing bonds 2023#31Net Funding Development Increased issuance after the COVID outbreak ✓ Low redemptions between 2019-2022 Net funding volume expected to decrease in line with fiscal consolidation Issuance and Redemptions 12,0 10,0 8,0 6,0 4,0 40 2,0 0,0 2ARD RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency 2015 2016 2017 Issuance 2018 2019 2020 2021 2022 Redemptions Net funding volume 31 Source: ARDAL, data as of December 2022#32Government Bond Portfolio Metrics 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency ✓ Average maturity increased steadily since 2012 - maintained above 8 years since 2018 At the same time average YTM was reduced significantly Increase in yields in 2022 in line with overall development in euro area + relatively long dated issuance in 2022 (average time to maturity higher than 12 years for issuance in 2022) Average Maturity and Yield Metrics for Slovakia 9,0 4,0% 8,5 3,5% 8,0 3,0% 7,5 2,5% 7,0 2,0% 6,5 1,5% 6,0 1,0% 5,5 0,5% 5,0 0,0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -Avg. Maturity (years, Ihs) Avg. YTM (new issuance, rhs) + 32 Source: ARDAL, data as of December 2022#33Risk Indicators Comparison 20 RDAL 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency As of 31 December 2022 Slovakia Belgium France Slovenia Latvia Germany Austria Euro Area Average Life of Debt (years) 8.19 10.15 8.50 10.22 7.55 7.23 10.92 92 8. 8.40 Refinancing Risk 1Y (% of total debt) 7.76 15.21 13.05 5 6. 6.27 10.39 20.43 17.84 15.08 Refinancing Risk 5Y (% of total debt) 39.93 38.71 45.32 32.08 52.34 52.52 50.80 46.80 Refixing Risk 1Y (% of total debt) 7.77 15.66 23.58 6.60 17.02 25.26 18.42 23.00 Refixing Risk 5Y (% of total debt) 39.93 39.71 52.36 32.16 57.11 57.24 51.37 51.31 Foreign Debt to Total Debt (before derivatives) % 0.84 1.07 0.00 2.01 3.56 0.00 3.38 0.69 Foreign Debt to Total Debt (after derivatives) % 0.01 0.00 0.00 0.08 3.56 0.00 0.00 0.04 Prudent risk management considering potential scenarios ✓ Average life of debt of Slovakia similar to Euro Area level and comparable to higher rated issuers ✓ Sufficient space for short term financing even after the economic and geopolitical events of 2022 キ 33 Source: ESDM, data as of December 2022#34Interest Payments Development 2AR RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency Interest payments are at historical lows as a percentage of GDP and have been declining since 2014 even in nominal terms In 2022 interest payments at similar level to 2021 in nominal terms and with further drop as a % of GDP ECB's PSPP helped in decreasing interest payments Interest Payment Dynamics for Slovakia (accrual) 1.4 1.2 1 2,00% 1,50% 0.8 1,00% 0.6 0.4 0,50% 0.2 0 0,00% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Interest payments in EUR bn (Ihs) Interest payments in % of GDP (rhs) ㄝ 34 Source: ARDAL, data as of December 2022#35Low Currency Risk and Diversified Investor Base 2ARDA RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and 1iquidity Management Agoney ✓ Almost no foreign currency debt The only USD bond matured in 2022 Currency Breakdown (%) ✓ Increased portfolio holdings of residents due to PSPP and PEPP Investor Type Breakdown (%)* 0,01% 0,2% 0,7% ■ EUR ■ NOK 43,1% ■ CHF 99,1% 53,5% ■ JPY 0,0% 6.4% ■ Resident - Banks ■ Resident - other institutions ■ Resident - retail ■ Non-residents キ 35 *Bonds held in Slovak Central Securities Depository Source: ARDAL, data as of December 2022#3620RD RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency MTS Slovakia EUR million 106 Introduction of MTS Slovakia in February 2018 ✓ Quoting obligation for Primary Dealers ✓ Average monthly trading volume EUR 104 million since inception Slovak PDs Secondary Market (EMAR) 96 1 250 1 000 157 750 168 124 441217 0 Feb-21 Jan-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 500 994 89 812 756 86 36 791 578 621 640 20 630 648 695 712 722 670 696 52 559 250 508 505 351 326 389 387 277 77 272 176 52 122 38 114 88 66 1025 122 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Dec-22 Nov-22 Oct-22 Sep-22 Aug-22 Source: ARDAL, data as of December 2022 MTS EMAR without MTS キ 36#374,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% -0,5% -1,0% Jan-15 Government Bond Yields Slovakia 10Y Government Bond versus Peers Jul-15 Jan-16 -10y-Slovakia Jul-16 Jan-17 Jul-17 -10y-Germany Jan-18 Jul-18 Jan-19 Jul-19 -10y-Belgium Jan-20 Jul-20 -10y-France H 37 2ARD RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and Liquidity Management Agency Jan-21 10y-Finland Jul-21 Jan-22 Jul-22 -10y-Slovenia Jan-23 Source: Bloomberg NBS, as of January 2023#38Auction Calendar 2023 - Bonds 24R RDAL 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency Auction Date 16 January 20 February 20 March 17 April 15 May Government Bonds Settlement Date 18 January 22 February Offered Bonds 2027, 2032, 2036, 2047 to be decided 22 March to be decided 19 April to be decided 17 May to be decided 19 June 21 June to be decided 18 September 20 September to be decided 16 October 18 October to be decided 20 November 22 November to be decided Auctions on the third Monday of the month - no auction in July, August and December ✓ Settlement T+2 (Wednesday) ✓ ✓ Non-competitive part of the auction usually on the next day (Tuesday) with settlement T+1 (Wednesday) Possibility to include additional auctions based on the funding requirements and market conditions ㄝ 38 Source: ARDAL#39Primary Dealers of the Slovak Republic 2ARD RDAL 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency Barclays Bank Ireland PLC ✓ Citibank Europe PLC ✓ Československá obchodná banka, a.s. (KBC Group) Deutsche Bank AG HSBC Continental Europe S.A. J.P. Morgan AG Slovenská sporiteľňa, a.s. (Erste Group) Tatra banka, a.s. (RBI Group) Všeobecná úverová banka, a.s. (Intesa Sanpaolo Group) キ 39#40V ✓ Contemplated Transaction 24RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Dobi and Liquidity Management Agency 43#41Transaction Term Sheet Issuer: Ratings: Status: Format: Currency: Tenors: Size: Maturity: 2ARDA 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency The Slovak Republic acting through the Ministry of Finance and the Agency A2 (negative) by Moody's / A+ (negative) by S&P / A (negative) by Fitch Senior Unsecured Regulation S only Euro Dual Tranche: 12-year and 20-year Benchmark [ ] February 2035 and ( ) February 2043 Fixed (Annual, ACT/ACT, ICMA) EUR 1 × EUR 1 Coupon: Denominations: Governing Law / Listing Use of Proceeds: Joint Bookrunners: Target Market: Slovak Republic Law / Bratislava Stock Exchange (Main Market) The net proceeds of issue of the Notes will be used for funding of the state debt of the Slovak Republic. Barclays, Deutsche Bank, Slovenska sporitelna (Erste Group) and Tatra Banka (RBI Group), Vseobecna Uverova Banka (Intesa Sanpaolo Group) EU MiFID II - Eligible counterparties, Professional and Retail Clients (all distribution channels) 40 +9#42Contacts Debt and Liquidity Management Agency Agentúra pre riadenie dlhu a likvidity - ARDAL Radlinského 32 813 19 Bratislava Slovak Republic Daniel Bytčánek Managing Director www.ardal.sk Reuters/Bloomberg: DLMA [email protected] Peter Šoltys Head of Debt Management Department [email protected] G TÜV SÜD ISO 9001 キ 41 TÜV SÜD ISO 27001 2ARDAL 2003 Agentúra pre riadenie dlhu a likvidity. 2023 Debt and Liquidity Management Agency#43Disclaimer 20 RDAL 2003 Agentúra pre riadenie dlhu a likvidity 2023 Debt and liquidity Management Agency THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT HAS BEEN PREPARED FOR INFORMATION PURPOSES ONLY. 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PRIOR TO ENGAGING IN ANY TRANSACTION, POTENTIAL INVESTORS SHOULD ENSURE THAT THEY FULLY UNDERSTAND THE TERMS OF THE SECURITIES AND ANY APPLICABLE RISKS. THIS DOCUMENT IS NOT A PROSPECTUS FOR ANY SECURITIES REFERENCED HEREIN AND NO PROSPECTUS HAS BEEN OR WILL BE PREPARED AND APPROVED BY RELEVANT AUTHORITIES IN RESPECT OF ANY SECURITIES REFERENCED HEREIN IN ANY JURISDICTION. INVESTORS SHOULD ONLY SUBSCRIBE FOR ANY SECURITIES DESCRIBED HEREIN ON THE BASIS OF INFORMATION IN THE RELEVANT OFFERING CIRCULAR AND TERMS AND CONDITIONS AND NOT ON THE BASIS OF ANY INFORMATION PROVIDED HEREIN. H 42