#1An H Photo credit: Uruguay XXI. República Oriental del Uruguay Institutional Investor Presentation October 2023 Ministerio de Economía y Finanzas 1#21 2 3 4 5 Key Credit Highlights After growing strongly in 2022, economic activity is poised to slowdown in 2023, impacted by a severe drought and lower regional and global demand. Steady improvement of public finances in 2020, 2021, and 2022, delivering on fiscal targets; moderate widening of fiscal deficit in the first half of 2023, driven by cyclically softer tax revenues and public infrastructure investment. 6 7 In the context of a significant deceleration of inflation within the target band, Central Bank gradually started reducing short-term policy rate, while holding a contractionary monetary policy stance. Current account deficit is more than financed by FDI, amid real exchange rate appreciation and large international reserve buffers. The government forges ahead with structural and fiscally conservative reforms, including the recent social security reform law passed by Congress. Strengthening in the Government's balance sheet, through a reduction in the sovereign's debt and interest burdens and continued improvements in the currency and debt structure. Uruguay becomes the top performer on ESG fundamentals among EM countries; string of recent rating upgrades and improvements in credit outlook by all five rating agencies, reflecting strong fundamentals and relatively low country risk.#31 After growing strongly in 2022, leading indicators suggest slower growth in 2023 3 Viudita Blanca Común (xolmis irupero). Photo credit: Leonardo Colistro#4Economic activity expanded strongly in 2022, although real GDP growth has since decelerated; agriculture and industry sectors affected by the severe drought and external demand. Annual real GDP change (1) (YOY, In %) 7 Real GDP change breakdown by sector for 2023Q2, production approach (1) (YoY, in %) Transport and Storage, Information and Communication 10 5 3 1 -1 -3 -5 2.5 Social, Government and Other Services 0.2 Financial and Professional Services 0.2 Trade, Accommodation and Food and Beverage Supply -1.5 Construction Electricity, Gas and Water Manufacturing Industry Agriculture, Fishing and Mining -27.4 -30 -1.8 -6.6 -11.8 -20 -10 O Uruguay's Average Annual Rainfall (3) (Annual country average accumulated rainfall in mm) -2.5 2000 1600 1200 800 -7 2017 2018 2019 2020 2021 2022 2023 2023 Q1 Q2 400 (1) Source: Central Bank of Uruguay. (2) Source: Uruguayan Institute of Meteorology. 10 Historical Average 2000 2006 2012 2018 2022 4#5Leading indicators anticipate a slower economic growth compared to the previous estimate made at the beginning of the year, weighed down by a severe drought and lower regional and global demand. Exports of goods and commodities prices (1) Exports of goods (YoY % change) 75 Commodities prices (Index base 100-Jan 2017) 160 Industrial Production (2) (YoY real change, in %) 30 50 25 -25 -50 Dec-20 Aug-21 Tax revenue collection (3) (YoY real change, in %) 20 10 140 20 123.0 120 10 100 -29.1 80 Apr-22 -10 Dec-22 Aug-23 Nov-20 Jul-21 Net Tourism Balance (4) -3.5 م 3.3 Mar-22 Nov-22 Jul-23 (Rolling 4-quarters, in millions of dollars) 1,600 1,200 800 400 Total Balance Balance with Argentina -53.2 -10 -171.2 -400 Dec-20 Aug-21 Apr-22 Dec-22 Aug-23 Dec-17 Oct-19 Aug-21 Jun-23 (1) Source: BCU and CPA Ferrere, based on Bloomberg and of Meat of Uruguay (INAC). Exports of goods are expressed in millions of dollars and calculations are carried out by the Ministry of Economy and Finance. The commodities prices index is a weighted average of soybeans, meat, rice, dairy products, and pulp export prices (2) Source: Ministry of Economy and Finance calculations based on data from the National Institute of Statistics. Data does not include production from the state-owned refinery. Net Tourism Balance is defined as the difference between inbound and outbound tourism expenditure. (3) Source: Tax Collection Office, Ministry of Economy and Finance. 5 (4) Source: Ministry of Tourism. Information for 2020 and 2021 are estimates by the Ministry of Economy and Finance, based on migration data.#6Strong labor market indicators reflected in an upturn in real wage growth, boosting private consumption. Employment and real wages (1) Employment rate (average of last 12 60 months) Real wage (YoY % change) Household consumption (2) (YoY real change, in %) 10 4.6 5 5 4 4.8 تباس 58 -5 3 -10 57.72 56 -15 56 Mar-17 Jun-18 Sep-19 Dec-20 Mar-22 Jun-23 1 Consumer confidence index(3) (Global) 54 70 -1 60 -2 Moderate optimism 51.4 52 50 -3 Moderate pessimism 40 50 -4 30 May-17 Aug-18 Nov-19 Feb-21 May-22 Aug-23 Apr-17 Nov-18 Jun-20 Jan-22 Aug-23 (1) Source: National Institute of Statistics. 6 (2) Source: Central Bank of Uruguay. (3) Source: Equipos Consultores and Universidad Católica del Uruguay.#7UPM completed the construction of the second pulp mill, on schedule, allowing them to start production operations; a large FDI project for producing e-fuels is expected to start in late 2024. UPM's pulp mill and Central Railway project (1) The construction of the new UPM plant was completed in December 2022 and the plant began operating in April 2023. ■ UPM invested a total of approximately US$ 3.5 billion (4.8% of GDP) to build a 2.1 million-ton greenfield eucalyptus pulp mill in Durazno and a port terminal in Montevideo. FDI net capital inflows (2) (Rolling 4-quarters, in % of GDP) 8.0 6.0 4.0 2.0 0.0 The construction of the Central Railway is still ongoing. It will be running from Paso de los Toros city to the port of Montevideo (273 km long). -2.0 -4.0 2017Q2 (1) Source: Ministry of Economy and Finance of Uruguay and UPM. (2) Source: Central Bank of Uruguay. 2018Q4 2020Q2 2021Q4 6.4 2023Q2 ☐ On June 8, 2023, ANCAP announced a US$4 billion investment in infrastructure and facilities designed to produce e-fuels using green hydrogen and captured biogenic carbon dioxide, through a joint venture with HIF Global. The project is expected to produce 180,000 metric tons of e-gasolines per year using 710,000 tons of captured carbon dioxide produced by ANCAP's biofuel subsidiary and 100,000 tons of green hydrogen derived from electricity generation produced from expanded wind and solar sources. ■ The construction is planned to start in late 2024. 7#82 Fiscal discipline aligned with fiscal rule 8 Cisnes en lago. Photo credit: Leonardo Colistro.#9Public finances have improved since 2020 as a result of strong commitment to fiscal discipline, and the three pillars of the fiscal rule have been met for three consecutive years (2020-2022); targets for 2023 were set in the Annual Accountability Budget bill sent to Congress in June. Indicative target on structural fiscal balance, to account for business cycle fluctuations and one-off/temporary spending and revenue items. Structural balance (1) (In % of GDP) -1 Indicative target cap on real growth in primary expenditure in line with estimated potential real GDP growth Primary spending (2) (Annual real change, in %) 3 Legally binding maximum level of annual net indebtedness in dollar amount. Real primary spending growth Indicative target Net indebtedness (3) (USD mm) 4,000 Net Indebtedness Legal limit -2 2 -3 -2.7 -2.7 1 -4 -5 -6 2020 2021 Structural balance Indicative target -1 2022 2023* 2020 2021 2022 -0.6 2.1 3,000 2023* 2,000 1,000 2,860* 2,370 2020 2021 2022 2023* Source: Ministry of Economy and Finance of Uruguay, based on the "Proyecto de Ley de Rendición de Cuentas 2022", submitted to Congress by end-June, (1) (2) 123 2023. Structural balance refers to the fiscal outcome adjusted for fiscal items impacted by economic cycle fluctuations and one-off/temporary spending and/or revenues. Potential real GDP growth rate for 2023 estimated at 2,1% (i.e. the indicative target for real primary spending growth is 2.1%). For subsequent years, potential real GDP growth estimated at 2,8%. (3) For 2023, the legal net indebtedness cap was increased from USD 2,200 million to USD 2,860 million due to the water deficit emergency, invoking the use of the legal escape clause in the fiscal rule. Government Net Indebtedness is defined as gross indebtedness (bond market issuance and disbursed loans) net of amortizations of market debt and loans, and the accumulation of Central Government's financial assets, during the fiscal year. (*) Projections for 2023.#10-1 -3 Primary fiscal deficit has widened in 2023 - explained by an increase in public infrastructure investment and cyclically softer tax revenues. Central Government's fiscal balance (In % of GDP) 2017 2018 2019 2020 2021 2022 August 2023* -5 Interest payments Primary deficit Overall deficit -4.0 Central Government overall deficit is budgeted at 3.2% of GDP in 2023, given projected real GDP growth of 1.3%. -7 Source: Ministry of Economy and Finance of Uruguay and Central Bank of Uruguay, based on the Rendición de Cuentas 2022, submitted to Congress by end-June, 2023. Does not Include extraordinary inflows to the Social Security Trust Fund. (*) Last 12 months. Based on nominal GDP projection for the 12-month period ended August 2023. 10#113 Enhancing the monetary policy framework and bringing down inflation ZZ RA AL GUA Photo credit: Central Bank of Uruguay. wwwwww 11#12|| III IV V Monetary policies focused on reducing inflation and anchoring inflation expectations within target band. Commitment to lower inflation as overriding objective Short-term Interest rate as policy instrument under IT regime Enhanced transparency in communication Free-floating exchange rate Policies for Financial de-dollarization 12#1312 Headline inflation has fallen sharply (to its lowest level in 18 years), on the back of decelerating tradeable and non-tradable inflation, unwinding supply effects from the drought and a restrictive monetary policy. Headline inflation (1) (YOY, in %) Tradable inflation (2) (YOY, in %) Administered prices inflation (2) (YoY, in %) 16 Weight in CPI Basket: 40.6% Weight in CPI Basket: 22.8% 12.0 9 12 Headline inflation Core inflation 8 4 8.0 4.0 0.2 3.5 0.0 Sep-20 Sep-21 Sep-22 Sep-23 Sep-20 Sep-21 Sep-22 Sep-23 6 Non-tradable inflation (2) (YOY, in %) Fruits and vegetables inflation (2) (YOY, in %) 60 12 Weight in CPI Basket: 33.7% Weight in CPI Basket: 2.9% Inflation target band 3.87 3.30 3 40 7.0 18.5 8 4 20 Sep-20 Jun-21 Mar-22 Dec-22 Sep-23 -20 Sep-20 Sep-21 Sep-22 Sep-23 Sep-20 Sep-21 Sep-22 Sep-23 (1) Source: National Institute of Statistics and Central Bank of Uruguay. (2) Source: Central Bank of Uruguay. Core inflation excludes fruit and vegetables as well as administered prices. 13#14Broad-based deceleration of the pace of price increases. Heatmap for Components of Headline inflation Core inflation Non-Tradable (NT) Inflation Rent Beverages Out of Home Foods Out of Home- meats Foods Out of Home- flour Diverse foods and beverages Breads and cereals Diverse services Clothing Household Communications Recreation and personal Vehicles Education Domestic Diverse goods Tradable (T) Inflation Diverse foods Beverages Meats and fish Red meat Poultry meat Meat Others Breads and cereals Non-Food Manufactured Goods Clothing Personal Hygiene Furniture Appliances Cleaning Medication Vehicles Publications Other Tradable Services Jan-22 Jul-22 Jan-23 Aug-23 Inflation 2 -2 Note: The data series for each inflation item is adjusted for seasonal variation and standardized relative to the historical average of Trend-cycle component. Source: Central Bank of Uruguay. Core inflation excludes fruit and vegetables as well as administered prices. 14#15Inflation outturn is in line with Central Bank's projections, and inflation expectations are converging. Central Bank's projected inflation path and inflation expectations (2) (YoY, in %) 12 Estimated Surprise inflation component (2) (Difference between MoM headline inflation and MoM median inflation expectation for corresponding month, in %) 0.8 Central Bank's projected 0.6 10 ■ Inflation path as of June 2023 0.4 L 0.2 Inflation 0.0 Expectation by end-2023 -0.2 Inflation target band 5.0 -0.4 Monthly inflation 4 below market expectation for -0.6 that month Monthly inflation above market expectation for that month 0.08 2 -0.8 Jun.-20 Sep.-21 Dec.-22 Dic-23 Jun-25 Sep-21 May-22 Jan-23 Sep-23 (1) Source: Source: Central Bank of Uruguay. Quarterly forecasts of the baseline scenario as of June 2023. Median inflation expectations based on Central Bank's market survey as of September 2023. (2) Source: Central Bank of Uruguay. 15#16Central Bank is gradually reducing the short-term policy rate, while maintaining a contractionary monetary policy stance; FX showed relatively low volatility over the last three years, including during global risk-off episodes. Monetary Policy Rate (MPR) and interbank interest rate (1) (In %) 12 11 10 MPR Interbank interest rate (average Nominal exchange rate (2) (Uruguayan pesos per dollar, daily. As of September 30th 2023) 46 44 42 40 10.0% 38 36 Mar-21 Jan-22 Nov-22 38.56 Sep-23 8 7 0 5 4 3 Jun-20 Implementation of the MPR regime (September 2020) Jul-21 Aug-22 Nominal exchange volatility in LatAm (3) (Quarterly average of the absolute value of daily percent changes) 1.6 1.2 0.8 0.4 0.0 Sep-23 2019Q2 Colombia Chile Brazil Mexico Peru Uruguay 2020Q2 2021Q2 2022Q2 20232Q2 (1) Source: Central Bank of Uruguay. Before September 2020, the monetary policy instrument was growth in M1 monetary aggregate. (2) Source: Central Bank of Uruguay. (3) Source: own calculations based on Bloomberg. Regional and country specific information is as aggregated or reported, as applicable. Each such country information may be calculated differently and aggregated by each respective source using various methodologies. Accordingly, this comparison is for illustrative purposes only and we do not purport assert that the above information is actually comparable. 16#174 Stable current account; banking sector with low exposure to the region 17 Photo credit: Uruguay XXI.#18Current account deficit fully financed by FDI, on the back of a resilient balance of goods and services... Current account balance and FDI (Rolling 4-quarters, in % of GDP) 8.0 CAB 6.0 4.0 2.0 O.O -2.0 -4.0 2017Q4 FDI CAB+FDI Source: Central Bank of Uruguay. Goods and services balances (Rolling 4-quarters, in % of GDP) 9 Balance of Services 6.4 7 5 2.7 3 1 Balance of Goods -Trade Balance of Goods and Services 17 4.5 0.7 3.8 -1 -3.7 2020Q3 2023Q2 2017Q4 2020Q3 2023Q2 18#19...despite real exchange rate appreciation; large international reserve buffers are a significant external backstop. Real Effective Exchange Rate of Uruguay (1) (Index base 100 = average 2019) 130 International reserves in Latam (2) (As of end of August 2023, in % of GDP) 30 120 110 100 90 80 -Multilateral excluding Arg and Bra -Multilateral -Regional (Arg and Bra) 19.9 20 10 86.4 83.9 80.9 70 Aug-19 Aug-20 Aug-21 Aug-22 Aug-23 (1) Source: Central Bank of Uruguay. (2) Source: International Monetary Fund, expect for Uruguay, where international reserves correspond to data from Central Bank of Uruguay. International reserves for Peru correspond to end- September 2023. The nominal GDP in US dollars corresponds to 2023, based on WEO projections as of April 2023. Regional and country specific information is as aggregated or reported, as applicable. Each such country information may be calculated differently and aggregated by each respective source using various methodologies. Accordingly, this comparison is for illustrative purposes only and we do not purport assert that the above information is actually comparable. 19#20Banking sector remains well-capitalized, with high liquidity levels and low regional exposure, although with still-high deposit dollarization. Solvency and dollarization of the banking system Number of times of minimum regulatory capital 2.0 1.5 Banking system's exposure to non-residents (To the non-financial sector, % of total) (1) Dollarization of Deposits of the Private Sector (% of total) 84 60 41.5 1.9 40 20 80 2001 Deposits Loans 20 18.1 -76 10 -73.7 1.0 72 Mar-15 Mar-17 Mar-19 Mar-21 Mar-23 Source: Central Bank of Uruguay. 2001 8.2 2023* 5.3 2023* (1) End-period; data for deposits includes only private non-financial sector. (*) As of July 2023. 20#215 IIIII Government-led structural reforms Photo credit: Uruguay XXI BABA 21 ||#22Government forges ahead with structural and fiscally- conservative reforms: "keeping the high-beam headlights on". Urgent Consideration (UC) Law(1) 2020-2024 Budget Law 2021 Budget Review Social Security Reform Approved on July 9th, 2020 ■Changes in the tax code for small businesses. ■Changes in the regulatory framework for energy markets. Commission of experts of the Pension Reform submitted the diagnosis on March 23rd 2021 and has 90 days onwards to present a comprehensive reform to Congress. ■Draft of new fiscal framework. Approved on December 18th, 2020 New governance for public enterprises: performance targets and accountability. Environmental and ESG-focused policies (Helsinski Principles). ■ Implementation of new fiscal institutionality. Approved on November 3rd, 2022 ■ Fullfillment of the three pillars of the Fiscal Rule in 2021 ◉ Proposes additional expenditures for three specific areas: education, I+D and citizen security. Provides for further public policies to foster long-term growth. Approved on April 27th, 2023 Parametric changes to all schemes. Established a common system for all the schemes that exist in the country. ■ Creation of an independent regulatory agency that oversees the entire regime. Mechanisms to encourage voluntary savings. 17 (1) On March 27th, 2022, a public referendum was held on whether to repeal, or uphold, 135 articles of the Urgent Consideration Law voted in 2020. The majority of the population (51,3%) voted in favour of upholding them. Source: Ministry of Economy and Finance of Uruguay. 22 22#23Social Security reform is focused on long-term fiscal sustainability and improving equity of the pension system. Social Security Reform ■ The reform plans to consolidate all retirement regimes, converging into a single system. Ten years after the approval (2033) the convergence will start, with the old pension system rules. weighing 50% and the new one 50%. The new system will gradually replace the old one, and the influence of the systems will be modified by 5% each year. So, the new system will fully take effect by 2043. ■ The approved reform gradually increases the retirement age to 65 years. ■ The minimum amount of worked years to retire stands at 30, although contributing for 35 or 38 years will result in early retirement at 64 or 63, respectively. ■ The calculation for pensions will include the best 20 years of income. ■ Allows current retirees to participate in the labor market and contribute to the pension system, alleviating fiscal pressures and expanding labor supply. ■ Increases benefits for vulnerable groups improving the equity of the system. 23#246 Photo credit: Uruguay XXI. Resilient debt structure and sustainable financing strategies 24#25The government debt-to-GDP ratio has decreased since the onset of the pandemic shock, while debt management strategies and relative price effects have significantly reduced the dollarization of debt. Gross and net debt stock of the Central Government (As of end-period, in % of GDP) 80 Gross debt Currency and maturity composition of debt (As of end-period) Average time to maturity (in years) 16 Net debt 61.3 57.5 60 12 40 20 56.2 54.7 8 Debt in local currency (% of total) 60 55.0 12.6 40 20 2016 2017 2018 2019 2020 2021 2022 2023 2005 2010 2015 2020 Q2 2023 Q2 Source: Debt Management Unit, Ministry of Economy and Finance of Uruguay. 25#26Central Government's funding needs and financing sources for 2023. Flow of funds (Annual, in USD million) FINANCING NEEDS Primary Deficit 1/ Interest Payments 2/ Amortizations of Bonds and Loans Change in Financial Assets FUNDING SOURCES Disbursements from Multilaterals and Fin. Instit. Total Issuance of Market Debt/ Others (net) 5/ Memo Item: Government Net Indebtedness (GNI) (*) Preliminary. The sum of the components may differ from the totals due to rounding. 2023 (*) 2024 (*) 5,287 4,454 590 243 1,935 2,048 2,685 2,140 78 23 5,287 4,454 450 350 4,682 3,995 155 110 2,370 2,182 (1) Excludes extraordinary transfers to the public Social Security Trust Fund (SSTF). (2) Includes interest payments to the SSTF on its holdings of Central Government debt, but does not net out market price valuation gains on above-par bond issuances. (3) For 2023, includes the obligations coming due on a contractual basis and bonds repurchased and early redeemed through August 2023. (4) Includes bonds issued domestically and in international markets. (5) Captures other financial sources of cash inflows for the Treasury, as well as financing operations that do not impact gross debt statistics. Source: Ministry of Economy and Finance of Uruguay. 26#27I Cornerstones of debt management strategy and sustainable financing goals for the rest of 2023. • Diversify sources of funding in international markets and continue broadening the investor base, particularly ESG-focused accounts. . Keep refinancing risk contained through LM operations, precautionary liquidity buffers and contingent credit lines. Align sovereign funding strategies (in bond market issuance and multilateral loans) with with achieving ambitious environmental targets. 127#287 Strong ESG foundations and low country risk Photo credit: Uruguay XXI 28#2920 40 Uruguay is the top global performer on ESG fundamentals in emerging markets and has the lowest sovereign risk premia in Latin America. Emerging Markets' ESG Score (1) (Index, 100 = best performance; as of end-September, 2023) Sovereign risk premia in LATAM (2) (EMBI spread, in bps; as of end-September, 2023) 80 Uruguay (#1) 60 Costa Rica Serbia Uruguay Romania Chile Jamaica Armenia Ukraine Bahrain Trinidad And Tobago Mexico Dominican Republic Jordan Georgia South Africa Kuwait Namibia Vietnam Izbekistan Chinam Sri Lan Papua New G Azerbaijan 800 MEX BRL COL -PER PAN -URY 650 -CHL 500 350 200 50 www Mar-20 May-21 Jul-22 Sep-23 1) 60 countries. Source: .P. Morgan Chase & Co. using data from Verisk Maplecroft, Sustainalytics and Climate Bonds Initiative. Disclaimer: "Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan's prior written approval. Copyright 2022 J.P. Morgan Chase & Co. All rights reserved." 2) Source: Bloomberg. Regional and country-specific information is aggregated or reported, as applicable. Each country's information may be calculated differently and aggregated by each source using various methodologies. Accordingly, this comparison is for illustrative purposes only and we do not purport to assert that the above information is actually comparable. wwUruguay 98 29 20#30In June 2023, Fitch raised Uruguay's credit rating to "BBB"; all five rating agencies now place Uruguay at least one notch above the investment grade threshold, for the first time on record. Uruguay's sovereign credit ratings (1) (As of September 30th, 2023) Baa1/BBB+ /BBB (high) Baa2/BBB /BBB Baa3/BBB- /BBB (low) Investment Grade Latest credit rating actions Fitch Ratings MOODY'S STANDARD & POOR'S RATINGS SERVICES MCGRAW HILL FINANCIAL On June 7, 2023, Fitch raised the long-term foreign and local currency sovereign credit ratings on Uruguay to 'BBB' from 'BBB-'. The outlook is stable. On May 17, 2023, Moody's Investor Service affirmed Uruguay's long-term foreign and local currency sovereign credit ratings at Baa2 and upgraded the outlook from stable to positive. On April 26, 2023, S&P Global Ratings raised the long-term foreign and local currency sovereign credit ratings on Uruguay to 'BBB+' from 'BBB'. The outlook is stable. DBRS On November22, 2022, DBRS-Morningstar upgraded Uruguay's Long-Term Foreign and Local Currency-Issuer Ratings to BBB. The outlook is stable. R&I Outlook: R&I S&P Moody's DBRS Fitch (Stable) (Stable) (Positive) (Stable) (Stable) On October 21, 2022, R&I upgraded the Foreign Currency Issuer Rating to BBB+. The outlook is stable. Source: Moody's, S&P, R&I, DBRS-Morningstar and Fitch. Agency ratings are not a recommendation to buy, sell or hold any security, and they may be revised or withdrawn at any time by the issuing organization. Each agency's rating should be evaluated independently of any other agency's rating, as each agency has different evaluation criteria. 30#31República Oriental del Uruguay THANK YOU