#1INVESTOR PRESENTATION July 2019 Ministerio de Hacienda Presidencia de la Nación July 17, 2019#2Executive summary ● On the path to a balanced fiscal budget О Primary fiscal deficit has been coming down consistently through a decline in spending in real terms, on its way to reach a primary fiscal balance in 2019. О Fiscal consolidation at the central administration level has not been achieved at the expense of Provincial finances. On the contrary, the consolidated fiscal position of the provinces is in a surplus. Relative price distortions are being fixed о О Subsidy reductions, particularly in the energy sector, have reduced distortions in relative prices, generating the appropriate incentives for industrial and export development. In contrast with 2018, the foreign sector accumulates nine consecutive months of trade surplus, contributing to a sharp reduction in the current account deficit for 2019. Boosting competitiveness on a systemic basis о Modernization of the domestic capital markets regulatory framework is contributing towards generating an environment that will increase the channeling of domestic savings. Government capital spending, particularly in the area of transportation, has been strategically geared towards increasing Argentina's productivity and competitiveness. ○ 2#31. Fiscal update 2. Macroeconomic Update 3. Systemic Competitiveness a. Domestic Capital Markets b. Energy c. Infrastructure#4Fiscal target is being met ACCUMULATED PRIMARY RESULT % of GDP 0,2% ene feb mar abr may jun jul ago sep oct nov dic 4 consecutive years of consistently improving fiscal results since the beginning of the current administration. 2016 2017 - 2018 2019 4#5Income grows systematically above spending INTERANNUAL GROWTH OF INCOME AND SPENDING In percentage 60% 50% 40% 30% 20% 10% 0% -Ingresos (sin extraordinarios) -Gasto primario jun-17 ago-17 oct-17 dic-17 feb-18 abr-18 jun-18 ago-18 oct-18 dic-18 feb-19 abr-19 jun-19 24 months of consecutive higher growth in income over primary spending. 32 points Of growth gap between inter- annual income growth and spending growth in June. 5#6-5% -10% -15% -20% ene-17 feb-17 mar-17 0% 10% 5% Real spending has been falling for almost 20 consecutive months NATIONAL PRIMARY SPENDING (NON FINANCIAL PUBLIC SECTOR) ON A CASH BASIS Annual Growth in percentage abr-17 may-17 jun-17 jul-17 ago-17 sep-17 oct-17 nov-17 dic-17 ene-18 feb-18 mar-18 abr-18 may-18 jun-18 jul-18 81-обе sep-18 oct-18 nov-18 dic-18 ene-19 feb-19 mar-19 abr-19 may-19 jun-19 19 consecutive months of continued reductions in government primary spending. -12% was the drop in year-over-year spending in real terms for June 2019. CO 12%#72003 Primary fiscal balance will be achieved in 2019 PRIMARY RESULT As % of GDP 2,7% 4,3% 4,1% 3,9% 2,7% 2.496 0,4% -0,2% -0,7% -1,196 -2,3% -2,3% -3,4% -3,8% -4,2% -5,4% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 It's been 10 years 0,0% since the last time the national government achieved a primary balance. 7#8Government spending is at the lowest level in 10 years NATIONAL PRIMARY SPENDING (SPNF) As % of GDP 16,2% 15,4% 13,4% 12,4% 12,7% 12,8% 24,0% 24,1% 23,2% 22,8% 22,1% 21,0% 19,5% 19,6% 19,7% 20,2% 18,5% 8#9Primary spending has fallen every year in this administration. PRIMARY SPENDING Inflation-adjusted pesos, % Change 32% 23% 24% 17% 16% 16% 11% 7% 8% 0% -8% 13% 8% 7% 6% 7% 7% 4% 3% -16% 2003 2005 2007 2009 Var. i.a. 2011 2013 5.500 5.000 4.500 4.000 3.500 3.000 -1% 2.500 -3% 2.000 -9%-10% 1.500 2015 2017 2019 (p) ▪Gasto primario real (eje der.) 6#10Provinces have converted fiscal deficits into surpluses AGGREGATE PROVINCIAL FISCAL RESULT In millions of pesos 80.000 60.000 40.000 20.000 5.075 71.581 -6.515 -20.000 -40.000 -28.804 -37.163 -45.881 -60.000 -49.036 -61.733 -80.000 -76.170 -84.270 -100.000 2014 2015 2016 2017 2018 Res. Financiero Res. Primario 10#11Almost every province has improved its fiscal performance... PROVINCIAL PRIMARY RESULTS As percentage of revenues Participación del resultado primario sobre los ingresos totales < -10% < -5% < 0% < 5% <10% > 10% Nota: no se analizan La Pampa y San Luis por no adherir al Consenso Fiscal. 6 Provinces had a primary surplus in 2015. 17 Provinces had a primary surplus in 2018. 11 11#12...measured on a primary and financial basis PROVINCIAL FINANCIAL RESULTS As percentage of revenues Participación del resultado total sobre los ingresos totales < -10% < 5% < -5% < 10% > 10% < 0% Nota: no se analizan La Pampa y San Luis por no adherir al Consenso Fiscal. 6 Provinces had a financial surplus in 2015. 11 Provinces had a financial surplus in 2018. 12#13Provinces are increasingly responsible for their fiscal performance PROVINCIAL TAX REVENUES As percentage of national tax revenues 55% 51,5% 50% 47,2% 45% 43,4% 40,1% 40,5% 40,0% 40% 35% 30% 2007-2015 2015 2016 2017 2018 2019 est. 13#141. Fiscal update 2. Macroeconomic Update 3. Systemic Competitiveness a. Domestic Capital Markets b. Energy c. Infrastructure#1552 50 48 46 44 42 sep-18 40 I W W W Ô 32 34 36 38 oct-18 feb-19 mar-19 abr-19 may-19 NOMINAL EXCHANGE RATE Pesos per dollar Monetary policy has yielded a reduction in FX volatility Reference Exchange Zone BCRA flexibiliza Intervención cambiaria jun-19 jul-19 15#16MONETARY BASE + LEBAC + LELIQ Million ARS of May-2019 Monetary base has been reduced significantly in real terms 1.5 -2015 -2016 -2017 -2018 -2019 1,3 ene 4,000 dic feb 1,1 3,500 nov 3,000 mar 0,9 2,500 0,7 oct 2,000 abr 0,5 sep ago 0,3 may 0,1 jun jul Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 9L-INC CENTRAL BANK INTEREST BEARING LIABILITIES As a proportion of international reserves Jan-17 ZL-INC Jan-18 Jul-18 Jan-19 16 0,4#17Economic activity is recovering Sector Indicador (s.e.) EMAE (INDEC) Industria Actividad y empleo Asalariados privados + públicos (MTEYSS) Recaudación por Seguridad Social real (AFIP) Importaciones desde Brasil (MIDC de Brasil) Comercio exterior Importaciones de bienes en USD (INDEC) Exportaciones de bienes en USD (INDEC) IPI (INDEC) Producción de hierro en toneladas (CAA) Producción de acero en toneladas (CAA) -0,3% -6,6% -0,3% -13,1% Demanda de electricidad no residencial en MWh (CAMMESA) Producción de autos en unidades (ADEFA) ISAC (INDEC) Despachos de cemento en toneladas (AFCP) Construcción Despachos de asfalto en toneladas (MinEM) Producción de laminados no planos en caliente (CAA) Permisos de edificación (INDEC) -5,5% -7,5% Sector agropecuario Actividad inmobiliaria Molienda de soja en toneladas (MinAGRI) Producción primaria de leche en litros (MinAGRI) Producción de carne avícola en toneladas (MinAGRI) Producción de carne porcina en toneladas (MinAGRI) Faena de carne vacuna en cabezas (MinAGRI) Molienda de trigo en toneladas (MinAGRI) Molienda de maíz en toneladas (MinAGRI) Producción de carne vacuna en toneladas (MinAGRI) Escrituras CABA (Colegio de Escribanos de la CABA) Escrituras PBA (Colegio de Escribanos de la PBA) Difusión* 5.9% 1,3% -1,2% -0.5% 2,1% 3,3% 38,5% 0,9% -1,9% 0,3% -0.2% -0,3% -0,2% 0,0% -2,5% -0,3% 1.2% 0.9% -3.3% -0.6% -1.7% 3,5% 9.5% -16,6% 6,0% 3.6% -3,0% -5,8% 1.1% 0,0% 5,4% -12,3% 0,1% 7,0% 6.0% 1.4% -6,5% 1,9% -0.1% -2,4% 3,4% -5,2% -2,6% 4,7% 3,0% -4,7% -12,8% 4,4% -1,1% -14,7% 6,1% -4,9% -3,5% 4,8% -8,9% 9,0% -14,3% 2,1% 7,4% -2,0% 0,8% -4,5% 2,8% 0,3% -1,4% 0,0% -6,4% -4,6% 7.9% 11,7% -27,9% -4,1% -6,3% -3,7% 4,8% 8,6% -3,4% -2,4% -3,6% -2,1% 3,4% 16,1% -11,8% 2,4% 0,1% -1,8% -3,3% 8,1% 7,1% 4,4% 4,3% -5,9% -8,0% 8,1% -22,6% 14,0% 0,0% -9,3% 17,3% 2,9% -4,1% -2,4% 7,7% 34,0% -37,0% 29,4% 4,1% -4,0% 2,9% 3,4% 0,2% 4,8% -5.9% -1,2% -2,6% -2,0% 2,9% 1,3% 1,4% 1,1% 2,0% 4,6% -9,3% -1,1% -0,8% 3,2% -0,8% 0,2% -4,9% 3,6% 0.9% 2,8% -3,0% 1,2% -1,2% -0,5% -6,8% 8,8% 3,3% 0,4% -2,5% 13,0% -4,1% 1,8% 0,4% 2,3% 2,3% 1,0% 8.8% -12,0% 2,6% -1,4% 2,6% -2,2% -3,3% 1,0% -2,5% -0.1% -7,4% 8,6% 1,3% -7,3% 2,8% 5,8% -18,3% 13,5% -2,7% -10,1% 4,9% -3,9% 4,1% -13,3% 14,5% 0,5% -15,7% 1,0% 38,5% 42,3% 61,5% 80,8% 19,2% 76,9% 60,9% oct-18 nov-18 dic-18 ene-19 feb-19 mar-19 abr-19 may-19 0,7% 0,0% -1,4% 0,8% 0,1% 0,0% 0,0% 1,2% 3.0% 2,5% 0,6% 7.3% -3.5% -2,7% 1,5% -0.9% 1.4% -6.3% -0.3% 2,3% 1,9% -0,4% -2.1% 6.3% 17#18TOTAL EXPORTS LTM in USD bn $90.000 $80.000 $70.000 $60.000 $50.000 $40.000 $30.000 $20.000 Dic-10 Abr-11 Growth of exports has resumed since 2016 Ago-11 Dic-11 Abr-12 Ago-12 Dic-12 Abr-13 Ago-13 Dic-13 Abr-14 Ago-14 Dic-14 Abr-15 Ago-15 Dic-15 Abr-16 Ago-16 Dic-16 Abr-17 Ago-17 Dic-17 Abr-18 Ago-18 Dic-18 May-19 $62.1MM Total May-19 $36,3MM Without grains & oilseeds Abr-19 18#19-13 ene-07 -8 Oct-07 -3 jul-08 2 abr-09 -Balance comercial ene-10 7 12 oct-10 17 jul-11 TRADE BALANCE LTM in USD Bn abr-12 ene-13 Nine months of trade surpluses reverted the trade balance oct-13 -Balance comercial energético jul-14 abr-15 ene-16 oct-16 jul-17 abr-18 - Balance turístico ene-19 19 -2 -6 3#20Sectorial evidence of growth in exports OIL & GAS USD mm $5.000 TRUCKS (PICK-UPS) USD mm $4.000 90% $3.000 $2.373 $2.129 $1.979 $2.000 $1.000 $0 2015 2016 2017 2018 $5.000 $4.054 40% $4.217 $4.000 $3.292 $3.010 $3.000 $2.590 $2.000 $1.000 $0 2015 2016 2017 2018 NON-TRADITIONAL MINING USD mm $3.000 $2.500 $2.000 $1.416 $1.480 $1.500 $1.000 $500 BEEF USD mm $2.500 $2.325 73% $2.445 116% $2.000 $2.016 $1.603 $1.500 $1.249 $1.074 $1.000 $500 $0 20 2015 2016 2017 2018 2015 2016 2017 2018 20#211. Fiscal update 2. Macroeconomic Update 3. Systemic Competitiveness a. Domestic Capital Markets b. Energy c. Infrastructure#22Converting USD debt to pesos LETES AND LECAPS HELD BY PRIVATE INVESTORS USD bn equivalent $ 17,1 ILETES USD LECAPS ARS ARS 486 ARS 500 ARS 415 $10,1 $9,9 ARS 463 ARS 451 $8,8 $8,6 $ 8,1 $15,4 $15,2 $15,1 $14,8 $13,8 $13,0 $ 11,8 $11,2 $10,7 $10,1 $9,7 ARS 411 $10,1 ARS 367 ARS 386 ARS 350 ARS 202 ARS 81 ARS 59 ARS 85 ARS 81 ARS 81 ARS 115 ARS 37 ARS 37 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 222 22#23Conservative maturity profile LETES AND LECAPS HELD BY PRIVATE INVESTORS USD bn equivalent $1.050 $ 909 $ 865 $ 648 $ 1.232 $ 1.223 $ 1.138 LECAPS MATURITIES HELD BY PRIVATE INVESTORS ARS Bn $57 $ 41 $ 58 $73 $ 60 $47 $79 $ 513 $ 465 $ 248 $ 265 $ 185 $ 138 I 26-Jul-19 30-Aug-19 27-Sep-19 25-Oct-19 29-Nov-19 17-Jan-20 14-Feb-20 $27 31-Jul-19 30-Aug-19 13-Sep-19 30-Sep-19 31-Oct-19 28-Feb-2030-Apr-20 31-Jul-20 23#24Debt securities payments by creditor type USD bn 2019 (2do semester) Bonds in foreign currency Interest in foreign currency Bonds in ARS Interest in ARS Public Sector Private Sector Total 4.6 4.1 8.7 0.0 0.0 0.0 2.6 2.6 5.2 0.0 0.1 0.1 2.0 1.4 3.4 2020 9.9 13.0 22.9 Bonds in foreign currency 2.8 4.0 6.8 BIRAF/CHF/3.375%/12-10-2020 0.0 0.4 0.4 BONAR/USD/8.75%/2024 0.2 BONAR/USD/8%/08-10-2020 BONAR 2020/USD/29-05-2020 0.5 2.1 Bonds in ARS 7.1 BOTAPO/BOPOMO 21-06-2020 0.2 BONAR DUAL 2020/ARGDUO/4.5% 0.0 BOGATO/CER+4%/06-03-2020 0.0 2511208 1.1 1.3 2.5 3.0 0.0 2.1 9.0 16.1 3.1 3.3 1.6 1.6 1.1 1.1 BONTE 2020/26%/21-11-2020 (Bank Reserve Requirements) 0.8 BONCER/2.25%/28-04-2020 5.0 BONAR/BADLAR+325/01-03-2020 0.3 BONAR/BADLAR+300/23-12-2020 OTHER %%% 2.0 2.8 0.9 5.9 0.1 0.4 0.8 0.0 0.8 0.0 0.2 0.2 2021 5.2 7.7 13.0 Bonds in foreign currency 0.1 5.6 5.8 Global 2021 0.0 4.5 4.5 BONAR/U$S/8,75%/07-05-2024 0.1 1.1 1.3 Bonds in ARS 5.1 2.1 7.2 BONCER/$/2,50%+CER/22-07-2021 2.3 BONTE/$/17,25%/13-09-2021 2.0 BONTE/$/18,20%/03-10-2021 0.0 BONAR/$/BADLAR+200PB/08-02-2021 0.8 BONAR/$/6,72763943%/31-12-2028 0.0 OTHER 0.0 1010 o o 0.6 2.9 0.0 2.0 1.3 1.3 0.0 0.8 0.1 0.1 0.1 0.1 Only 30% of bond maturities coming due in 2020 are denominated in hard currency. 24 24#25Digitalization have simplified domestic capital market access COMPANIES HAVING ACCESS TO CAPITAL MARKETS FINANCING Number of Issuers 407 12 Grandes Empresas 347 76 10 307 Pymes 2 63 54 Fiduciantes 146 87 FCI mercados 74 187 177 173 2015 2017 mar-19 Total The number of companies obtaining capital markets financing has grown by +33%. SMEs' access to financing in the capital markets has Doubled. Source: CNV. Note: Trustees include only those companies not registered as issuers with the CNV. SMEs placing checks and promissory notes in the secondary market are not included. 45 25#26More investors in mutual funds thanks to access simplification INVESTORS IN MUTUAL FUNDS Total count of registered accounts 710 261 532 439 147 41 48 42 5X is the number of times that the investor base has grown since 2015. +570 thousand investors have been added to the mutual funds market between 2015 and 2019. 236 28 398 402 142 343 19 208 123 +260 thousand investors through were added through dic-15 dic-16 dic-17 Humanas Juridicas dic-18 Cuotapartistas por ACDI mar-19 digital platforms. Source: CNV based on information provided by CAFCI and ACDI 26#27Stronger market structure through the composition of players EVOLUTION OF REGULATED AGENTS BY CNV Number of registered entities 838 761 472 536 405 167 348 2015 ထာ 289 2018 ■ALYCs ■AN Y AN RUCA ■ AGGI 60 28 293 mar-19 AP Note: Neither brokerage agents, nor collective investment agents are included. Source: CNV. More financial release Thanks to an increase in the number of agents. +60 % has the number of agents ruled by CNV grown between 2015 and 2019. 27 27#281. Fiscal update 2. Macroeconomic Update 3. Systemic Competitiveness a. Domestic Capital Markets b. Energy c. Infrastructure#29Energy subsidies remain on a reduction path ENERGY SUBSIDIES Percentage of GDP Electricidad Gas Otros 0.7% 0,4% 0,3% 0,4% 0,0% 1,6% 1,7% 1,2% 2,0% 2,1% 3,0% 3,5% 3,3% 2,4% 1,5% 1,4% 1,1% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 29 29#30Miles de millones de USD The energy trade deficit has been wiped out ENERGY TRADE BALANCE USD Bn 7,8 7,8 7,2 6,9 6,2 6,5 6,7 6,5 7,0 5,4 5,6 4,9 5,6 6,1 5,2 3.5 M 3,8 18 -0,5 -1,0 -1,5 -1,7 -2,8 -2,6 -3,1 -4,3 -4,8 Exports FOB Imports CIF 4,7 4,2 2.2 2,0 2,5 -2,8 -3,2 -2,3 -4,6 -5,0 -5,7 -6,9 -6,4 -6,9 -6,5 -9,1 -11,3 Exports Imports -12,5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019p 1.5 1,5 0.3 -1,7 -1,4 4m 4m 2018 2019 30#31Market prices stabilize with reduced Government participation NATURAL GAS DOMESTIC PRICE AND GOVERNMENT PARTICIPATION In USD/MMBTU 6 5 9% 12% 27% 4 38% 47% 3 39% 41% 91% 88% 2 2% 73% 62% 61% 53% 1 98% 59% 2012 2013 2014 2015 2016 2017 2018 2019 p 31 Precio Incentivos#320,5 0,4 1,1 Natural gas exports are taking off MONTHLY NATURAL GAS EXPORTS 2018 - APRIL 2019 MCM/DAY Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 1,9 12 1,5 1,2 0,7 0,5 0,5 0,5 0,6 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 5,4 4,6 Apr-19 6,3 6,4 7,6 32 22#33The renewable energy segment is underway 140 projects in commercial operation and construction entailing a total investment of USD 7.2 Bn and generating 4,790 MW In commercial operation Under construction Number of projects 42 98 Power capacity 1.200 MW 3.580 MW Estimated investment USD 1.8 Bn USD 5.4 Bn 55% 24% 17% 4% 33#341. Fiscal update 2. Macroeconomic Update 3. Systemic Competitiveness a. Domestic Capital Markets b. Energy c. Infrastructure#35We are building the roadways that were not being built before PARADA Improvements reduce between 9% and 12% of total export costs Highway kilometres on which works are carried out Average for the period 2003-2015 vs. 2015-2019 x10 The kilometre of asphalt costs 53% less than in 2015 in the construction of highways and 35% less in the construction of roadways 83 Km 933 Km 35 2003-2015 2015-2019#36Double carriage trucks are reducing transportation costs Ruta13- SCANIA YP YPF YPF +30% to 60% of load than a conventional truck ZAK MUN PADILLA We have authorized the use of climbed-load and double carriage trucks in more than 40 thousand km of national roads and 138 thousand km of provincial roads -30% in transportation costs 36#37TRENES ARGENTINOS CARGAS 9763 Trains have been improved to reduce transportation time Belgrano cargas freight traffic reached its high since 1994 as it carried 2,079 million tonnes during 2018 In 2015, transporting a load from Salta took 15 days Now, it takes half of that and in 2020, it will only take 3 days Annual freight transportation on Belgrano Cargas ('000 tons) 2.400 2.200 2.000 1.744 1.800 1.653 1.565 1.600 1.358 1.3391.378 1.400 1.132 1.200 1.138 1.000 808 800 600 400 200 0 1994 1995 1996 1997 1998 916 826 772 1999 2000 2001 2002 2003 2004 2005 2006 2007 552 757 2.079 + 80% 2015-2018 1.103 1.158 1.152 936 1.250 986 1.013 842 765 767 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018#38" Port procedures simplification has reduced costs Exports Cost per container in USD - 61% 509 Imports Cost per container in USD 999 - 17% 834 198 2015 2018 2015 2018 KEY RESOLUTIONS Elimination of TAP obligation Reduction of sweeping and cleaning costs (-66%) Elimination of Port Support Area Reduction of trailer tariff Elimination of enclosing#39USD 200 M in annual saving in grain ports 30% of tariff reduction of pilotage and towage services through maximum tariffs. Up to 50% of tariff reduction for stowage thanks to increase in competitiveness. We have opened tug competitiveness: USD28,000 vs. USD7,000 at present. . Mooring Tariff reduction by 50%. Elimination of Draft Survey obligation. Elimination of the obligation to hold inspection by SENASA (6 USD/ton). Extra cost for phytosanitary inspection has been eliminated (Frontier Sanitation) for by-products, flours and oils (USD20,000 per ship). Work has been done with Customs for dredges to avoid coming out to move throughout Argentine interports (300,000 USD per movement). 39#40Modernization of 90% of the country's airports 18 years 4 years COMPLETED RUNWAYS 7 13 NEW TERMINALS 7 20 NEW 7 29 LIGHTING SYSTEMS NEW CONTROL TOWERS 1 7 SEVA#41Flights revolution: connecting the provinces 94 Domestic flight connections December 2015 May 2019 153 +63% Domestic flight connections Today, more Argentines travel within the country without needing to stop over in Buenos Aires More federalism Proportion of passengers not connecting through Buenos Aires Jan-May. 1396 29 Not going through Buenos Aires, 57 +97% 1296 1196 Not going through 1096 996 Buenos Aires 896 796 696 596 496 2015 2016 2017 2018 2019 41#42Flights revolution: connecting the provinces and the world December 2015 May 2019 125 +36% Arrival of low cost international airlines International flight connections b norwegian 92 International flight, connections 15 Not going through Buenos Aires 39+160% Not going through Buenos Aires flybondi .com JetSMART andes Líneas aéreas 42#43Roadway works to improve the quality of life. ՏՈՍ 380 88 69% of urban buses in the Greater Buenos Aires travel through a Metrobus system Travel time is reduced by 30% 117 Metrobus systems in the country ⚫15 completed 2 under construction are used by 2.3 M users every day Metrobus La Matanza 43#44INVESTOR PRESENTATION July 2019 Ministerio de Hacienda Presidencia de la Nación