Hellenic Republic Investor Presentation June 2019 June 2019 1 - - PowerPoint PPT Presentation

June 2019 1

Hellenic Republic

Investor Presentation

June 2019

June 2019 2

An EU member facing three continents

Key facts and figures on Greece

Athens

Piraeus Port 8th largest port of Europe by containers handled

Area: 50,949 sq. miles Capital: Athens Language: Greek Population: 10.8m Life expectancy: 81.2 years Currency: Euro (EUR) Exchange rate (as of 20/06/2019): 1.00 EUR = 1.13 USD Nominal GDP (2018): €185bn Expected Real GDP growth (2019): 2.5% CG debt (as of end Q1 2019): €358bn Schengen area member since: 2001 External loans (as of end December 2018): €271bn EU member country since: 1981 Key economic sectors: tourism services; shipping services; food and beverages; industrial products; petroleum products; chemical products Athens

Euro area European Union

Sources Elstat, WHO, Bloomberg, Greece 2019 budget, IMF

June 2019 3 Economic turnaround

⚫

Return of GDP growth: Growth is expected at 2.5% in 2019 and at 2.1% on average over 2020-2022 according to the IMF

⚫

Industrial production on a strong growth path : Industrial Production Index increase by 7% over 2015 - April 2019

⚫

Unemployment rate decreasing: From 24.9% (2015) to 18.1% (March 2019)

Key investment highlights

Intense reform effort fueling long-term growth

⚫

Restored fiscal sustainability: Greece has consistently overperformed primary surplus targets since 2016

⚫

Addressed banking vulnerabilities in terms of capital adequacy and governance with a confirmation through ECB’s stress-test in 2018

⚫

Growth-enhancing structural reforms encompassing a wide spectrum of markets and professions Strong and lasting official support

⚫

EU institutions hold 70%+ of government debt and contribute to the very long weighted average maturity of the portfolio (21.1 years as end of April 2019)

⚫

Debt from EU creditors ensures long-term sustainability and contains interest rate risk

⚫

Pipeline of projects in the context of the EIB’s EFSI with €2.7bn of financing approved and over €11bn of additional investment expected Strategic position as infrastructure hub

⚫

Privatizations and license auctions of airports to unlock growth potential in tourism arrivals

⚫

Entry gate to EU for Asian goods with more potential to be unlocked after investments in ports

⚫

More potential to be unlocked after investments in ports to connect ports to Central Europe by high quality road/railroad networks A clear path for upcoming years

⚫

A comprehensive growth plan framed to build inclusive and sustainable growth in upcoming years

⚫

Maintaining the momentum of the past reforms building on Greece’s achievements since 2015

Sources Elstat, Greece 2019 budget, IMF, PDMA

June 2019 4

• 2. Greece undergoes an economic turnaround
• 1. Current Greek debt profile
• 3. Effective fiscal consolidation and clear long-term budget trajectory

June 2019 5

⚫

Greece has completed its return to market since the end of the European programme – A €2.5bn 3.450% 5-year benchmark bond was issued in January 2019 – The transaction represented Greece’s first benchmark trade after programme exit – It benefited from a strong demand (oversubscription of 4.0x) and a relatively low yield of 3.60% (tightening from the IPT of 27.5bps) – Greece also issued a €2.5bn 3.900% 10-year benchmark bond in March 2019 – This transaction represented Greece’s first 10-year bond issuance since the beginning of the Eurozone crisis in 2010 and marked a key milestone for the country – The transaction generated a strong interest from investors (oversubscription of 4.7x) and benefited from the continued positive backdrop for GGBs (re-offer yield of 3.90%)

⚫

These transactions signal a successful exit from the programme as do the three post- programme monitoring reports published by the European Commission

⚫

The completion of the debt relief measures by the Eurogroup created a sustainable debt trajectory for over 10 years – Short-term measures include (i) smoothing the repayment profile through an extension of the WAM, (ii) reducing interest rate risk through a bond exchange, swap arrangements and matched funding, and (iii) waiving the step-up interest rate margin applied the loan disbursed under Greece’s second financial assistance programme by the EFSF/ESM to finance a debt buy-back – Medium-term measures include (i) a further deferral by 10 years applied to €96.9bn of EFSF loans and an extension of the weighted average maturity by 10 years and, (ii) the abolition of the step-up interest rate margin related to the debt buy-back tranche of the second Greek Programme and (iii) the restoration of ECB profits – The Eurogroup in addition committed to activating further debt relief measures if necessary in the longer term

Highlights on debt management Key evolution of Greek debt parameters (€bn)¹,²

Highlights on current Greek debt profile

Greece has normalized its market access and built a continuous market presence

Notes 1. Unless otherwise indicated 2. Cash buffer of €26.8bn as of year-end 2018 incl. cash deposits and the segregated account Sources Elstat, PDMA, Greece 2019 budget

2013 2014 2015 2016 2017 2018 Nominal GDP 181 179 177 176 180 185 CG Debt 321 324 321 326 329 359 % GDP 178% 181% 181% 185% 182% 194% CG Debt net of cash buffer n.a. n.a. n.a. n.a. n.a. 332 % GDP n.a. n.a. n.a. n.a. n.a. 180% WAM (years) 16.0 16.1 16.8 16.6 18.3 18.2 GG balance (23.8) (6.4) (9.9) 0.9 1.4 1.2 % GDP (13%) (4%) (6%) 1% 1% 1% GG primary balance (16.5) 0.6 (3.7) 6.5 7.0 7.6 % GDP (9%) 0% (2%) 4% 4% 4% Interest payment 7.3 7.0 6.3 5.6 5.6 6.4 % GDP 4.0% 3.9% 3.5% 3.2% 3.1% 3.5% % outstanding 2.3% 2.2% 1.9% 1.7% 1.7% 1.8% Rating S&P B- B CCC+ B- B- B+ Moody's Caa3 Caa1 Caa3 Caa3 Caa2 B3 Fitch B- B CCC CCC B- BB-

June 2019 6

External loans 260.5 Domestic loans 2.6 External bonds 1.7 Domestic bonds 58.1 T-bills 15.3 Repos 19.5

Official creditors outweigh the private sector in the Greek debt portfolio

Overview of the Greek debt (1/4)

CG debt by coupon type as of Q1 2019 (% of total)² CG and guaranteed debt as of Q1 2019 (% of GDP) CG debt held by the official sector as of Q1 2019 (€bn) CG debt as of Q1 2019 (€bn)

Notes 1. Total equal to external loans minus other external loans of €125m plus SMP/ANFA bonds of €11.0bn 2. Fixed/floating ratio taking into account 1) interest rate swap transactions, 2) the use of funding instruments by ESM regarding the loans that have been granted to the Hellenic Republic and 3) the incorporation of the risks metrics of EFSF’s liability portfolio into the Greek debt portfolio. Index-linked bonds are classified as floating rate bonds

⚫

Greece’s central government (CG) debt is mainly held by the

• fficial sector

– Official loans and bonds represent 76%

• f the total debt

as of Q1 2019

⚫

The debt is mainly fixed-rated based thanks to a number of measures that have been implemented such as swap arrangements

Total: €357.7bn Total: €271.4bn¹

Source PDMA

EFSF 130.9 GLF 52.9 ESM 59.9 IMF 9.0 ​

• SMP/ANFA

11.0 EIB loans 7.7 29% 33% 31% 30% 48% 89% 91% 72% 67% 69% 70% 52% 11% 9% 2013 2014 2015 2016 2017 2018 Q1-2019 Fixed rate Floating rate 178% 181% 181% 185% 182% 194% 193% 10% 9% 8% 7% 7% 6% 6% 188% 191% 189% 192% 189% 200% 199% 2013 2014 2015 2016 2017 2018 Q1-2019 Central government debt Outstanding guaranteed debt

June 2019 7

A long weighted average maturity of 21.1 years as of April 2019

Overview of the Greek debt (2/4)

⚫

The weighted average maturity

• f the Greek debt

has increased by

• c. 13 years since

the financial crisis

⚫

It is of 21.1 years as of April 2019 – Much higher than in other Eurozone countries (7.4 years in Portugal; 7.5 years in Spain and 6.3 years in Cyprus in Q1 2019) Evolution of the weighted average maturity of the Greek debt (years)

Sources PDMA, IGCP, Spain Tesoro Publico, Cyprus DMO

8.5 7.9 7.1 6.3 15.0 16.0 16.2 16.8 16.6 18.3 18.2 21.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Apr-19

June 2019 8

Overview of the Greek debt (3/4)

Maturity profile of the Greek debt as of April 2019 excluding T-bills and repos (€bn) 2018 interest exp.¹

2018 interest expenditures in line with other post- programme countries

Sources PDMA, Eurostat Note

• 1. 2018 general government interest expenditure of post-programme countries as reported by Eurostat

8.5 4.9 5.0 9.7 11.7 9.4 9.2 8.0 5.9 11.5 7.3 5.5 5.1 5.4 11.2 6.1 5.8 5.8 10.8 5.5 5.5 4.8 3.5 7.6 3.6 3.7 3.8 3.8 3.9 4.0 4.1 4.2 6.2 6.3 6.4 6.6 6.7 6.8 8.1 7.1 7.2 7.4 ECB - ANFA Holdout bonds Bonds ECB - SMP BoG EIB Other loans EFSF ESM GLF IMF Greece €bn 6.2 % of revenues 7.0% % of GDP 3.3% Portugal €bn 7.0 % of revenues 7.9% % of GDP 3.5% Ireland €bn 5.2 % of revenues 6.4% % of GDP 1.6% Cyprus €bn 0.5 % of revenues 6.2% % of GDP 2.5%

June 2019 9 18.2 14.1 14.4 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.7 14.8 14.4 14.4 14.9 14.8 14.8 14.8 14.9 14.3 14.7 15.3 15.3 15.3

Evolution of the stock of T-Bills

Overview of the Greek debt (4/4)

⚫

Greece does not face short-term refinancing risks – Stable level of T-bills since Q1 2013

⚫

The country regularly auctions 52-weeks T-Bills since March 2018 Evolution of the stock of Greek T-Bills by quarter (end of period, €bn)¹

Note

• 1. PDMA figures when available, Bloomberg otherwise

Sources PDMA, Bloomberg

June 2019 10 Weighted average maturity of European peers (years) Interest debt service as of year-end 2018 (% of GDP)

Exceptionally long maturities and low rates to contain debt service in the very long term

A comparable debt profile for Greece

Sources PDMA, IGCP, Cyprus DMO, Spain Tesoro Público, NTMA, MEF, Montenegro MoF, Albania MoF, Eurostat

Euro-denominated debt of European peers (% of total)¹ Share of fixed-rate debt of European peers (% of total)¹

Note

• 1. Latest data available

⚫

Greece’s debt metrics have significantly improved over the last decade and the country benefits from a favourable debt structure

⚫

The weighted average maturity is much higher than peers

⚫

The debt is largely denominated in local currency with mostly fixed rated coupon which shields Greece against interest rate and currency risks

98% 100% 97% 100% 100% 82% 51% 90%

Average 21.1 7.4 6.3 7.5 10.1 6.8 5.2 9.2

• 5.

Average 91% 91% 64% 95% 76% 75% 74% 81%

Average 3.3% 3.5% 2.5% 2.5% 1.6% 3.7% 2.2% 2.8%

Greece Portugal Cyprus Spain Ireland Italy Albania Average

June 2019 11

Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 Jun 19 Moody's S&P Fitch

Multiple rating upgrades since January 2018 to reflect the new paradigm Greece has shifted into

Greek ratings

⚫

Greece has benefitted from multiple rating upgrades since 2018 that reflect the positive economic dynamics – S&P: +1 notch in January 2018 and +1 notch in June 2018 – Fitch: +1 notch in February 2018 and +2 notches in August 2018 – Moody’s: +2 notches in February 2018 and +2 notches in March 2019

⚫

The country’s key credit strengths include – A favorable debt structure with low debt-servicing costs – Moderate borrowing needs and a strong cash buffer – A strong track record in implementing structural reforms including fiscal ones

Rating agencies’ views

BB-, stable B1, positive B+, positive

The reform programme appears firmly entrenched and reforms implemented are starting to bear fruit. The track record of strong fiscal performance is now firmly established and is likely to be sustained, as most of the fiscal improvement is due to structural measures. Public debt sustainability is materially enhanced over the medium term Source Moody’s Credit Opinion, March 2019 Greece's policy predictability is improving, as are its economic prospects. During 2016 and 2017, the government ran primary fiscal surpluses while the multiyear recession ended last year. (…) Greece will continue to run fiscal surpluses and pay down debt through 2021. Source S&P’s research update, July 2018 The upgrade reflects improved public debt sustainability, underpinned by the debt relief measures agreed by the European creditors, a track record of general government primary surpluses, our expectation of sustained GDP growth (…). Source Fitch’s full rating report, August 2018

BB-/Ba3 B+/B1 B/B2 B-/B3 CCC+/Caa1 CCC/Caa2 CCC-/Caa3 CC/Ca C

Evolution of Greek ratings since 2012

June 2019 12 Evolution of the CG debt stock by instrument (% of GDP)¹ Evolution of net Financing Needs (% of GDP)

A decreasing debt-to-GDP ratio and largely contained financing needs

Debt Sustainability Analysis – Greek scenario

⚫

The macroeconomic framework is conservative and in line with IMF and the European Commission assumptions

⚫

Consistent with Greece’s successful return to market in 2019, the share of 10- year bonds will progressively increase

• ver time

⚫

Market interest rates depend of the risk-free rate and Greece’s risk premium that is determined by its debt- to-GDP ratio²

Notes 1. Excluding guaranteed debt and repos 2. Greece is assumed to access markets by end-2018 at an initial rate of 4.5% as per the IMF DSA dated July 2018. Over time, the market rate is assumed to evolve according to changes in (i) the risk-free rate (i.e. the EFSF interest rate that is expected to reach 3.3% in the longer term) and (ii) Greece’s risk premium that is determined by the debt-to GDP ratio (i.e. as long as this ratio is superior to the Maastricht threshold of 60% of GDP, any one percentage point increase/decrease in the debt-to-GDP ratio leads to increase/decrease of the risk premium by 3 bps)

Assumptions – Baseline scenario Weighted average interest rate (in%)

1.5% 3.0%

• 0.5%

1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2019 2023 2027 2031 2035

0% 50% 100% 150% 200% Short-term debt excl. collateral Historical Bonds and Loans Official Sector Loans Private Bonds and Loans 0% 3% 6% 9% 12% 2019 2020 2025 2030 2035 Macroeconomic assumptions Real GDP growth rate (%) 2.4% 2.2% 1.2% 1.0% 1.0% Inflation (%) 1.0% 1.4% 1.8% 1.8% 1.8% Nominal GDP (€bn) 190.1 196.8 228.7 263.3 302.3 Fiscal assumptions Primary surplus (% of GDP) 3.9% 3.5% 2.0% 1.5% 1.5% Primary surplus (€bn) 7.4 6.9 4.6 4.0 4.5 Financing assumptions EFSF interest rate 1.4% 1.3% 2.2% 3.1% 3.2% Market interest rates 4.9% 4.5% 4.6% 5.0% 5.0%

June 2019 13 Gross financing needs (% of GDP)

⚫

These figures and graphs are extracted from the second enhanced surveillance report published by the European Commission in February 2019

⚫

Under the baseline scenario, the debt remains on a downward path until 2060 expect for the 2033 peak that relates to the capitalization of the deferred interests¹

⚫

The European Commission forecasts gross financing needs to remain around 10% of GDP until 2023 and to then increase slowly, while remaining before the 20% threshold until 2060²

⚫

A scenario assuming a €3.7bn buy-back of IMF loans has ben added, based on PDMA’s estimates of impact

Comments Key results and assumptions Gross government debt (% of GDP)

General Government Debt Sustainability Analysis - European Commission

Evolution of general government debt-to-GDP ratio and financing needs

2018 2019 2030 2040 2050 2060 Debt (% of GDP) Baseline 182.8 172.2 115.8 112.4 100.0 87.6 Adverse 181.9 171.1 125.2 136.3 146.2 171.4 GFN (% of GDP) Baseline 23.3 10.9 10.2 15.0 16.8 17.7 Adverse 23.2 10.9 12.2 20.4 27.6 37.6 Primary surplus (% of GDP) Baseline 3.7 3.5 2.2 2.2 2.2 2.2 Adverse 3.7 3.5 1.5 1.5 1.5 1.5 Nominal growth (%) Baseline 2.5 3.2 3.0 3.0 3.0 3.0 Adverse 3.0 3.4 2.8 2.8 2.8 2.8 Refinancing rates (%) Baseline 3.8 5.1 4.7 4.3 4.0 Adverse 3.7 5.4 5.4 5.6 6.0

Notes 1. Deferral of 10 years (i.e. until 2033) applied to interest on €96.9bn of EFSF loans agreed in the June 2018 agreement 2. Debt is deemed sustainable as long as the gross financing needs remain below 15% of GDP in the medium-term and 20% of GDP thereafter as per the benchmarks agreed by the Eurogroup Source European Commission

50 100 150 200 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 Baseline scenario Adverse scenario 5 10 15 20 25 30 35 40 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 Baseline scenario Adverse scenario Sustainability

June 2019 14

• 2. Greece undergoes an economic turnaround
• 1. Current Greek debt profile
• 3. Effective fiscal consolidation and clear long-term budget trajectory

June 2019 15 Industrial production index (Jan-2016=100) Real GDP growth (% change y-o-y) Credit to domestic NFC (€bn, end of period) Private consumption growth (% change q-o-q)

Clear signs of an economic turnaround

Over the past 2 years, hard data have shown consistent signs of economic recovery

⚫

Real growth of GDP is

• recovering. As of Q4

2018, year-on-year growth was 1.9%. Real GDP growth is forecasted at 2.5% in 2019 by Greece and 2.1% on average over 2020-2022 by the IMF

⚫

This economic turnaround is mainly carried by the continuous increase in household consumption since 2016 Q2 and confirmed by the steady rise of industrial production

⚫

The early recovery has not relied on a credit boom – a return of credit expansion could support investment and ultimately growth

A solid growth in 2017 and 2018 The main and consistent driver of GDP growth since 2016 Q2 Growth picks up despite bank lending contraction Steady increase in industrial output

Sources Bank of Greece, ELSTAT, IMF, Greece 2019 Budget

(1.3)% (0.1)% 0.5% 1.3% 0.5% (0.4)% 0.1% (0.3)% 0.8% 0.8% 0.4% (0.2)% 0.4% 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 95.4 69.2

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 2018 19

(0.3%) (4.3%) (5.5%) (9.1%) (7.3%) (3.2%) 0.7% (0.3%)(0.2%) 1.4% 1.9% 2.5% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 90.7 112.5 70 80 90 100 110 120 130

.................................................................................................... 2011 2012 2013 2014 2015 2016 2017 2018 19

Annual average

June 2019 16

Greece has performed an impressive adjustment of macroeconomic imbalances

Striking a balance in external accounts

Comments Current account 2009-2019e (% of GDP) TARGET 2 balance 2007-2018 (€bn) Trade balance in goods and services 2009-2018 (% of GDP)

Sources European Central Bank, IMF, Eurostat, ELSTAT

➢ In 2009, the current account amounted to (12.3)% of GDP mainly due to a large trade deficit of (10.0)% of GDP ➢ The current account has strongly improved with an estimated deficit of (2.9)% in 2018, in line with the significant improvement in the trade balance, which reached a surplus of +0.4% ➢ In parallel, the monetary balance of Greece vis-à-vis the rest

• f the Eurozone has started to adjust after the 2015

deterioration that had led to capital controls

TARGET 2 is a real-time settlement system between central banks for international transactions inside the Eurozone managed by the ECB c.€83bn have flown back to Greece since July 2015

(24.2) (107.2) (108.5) (8.3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

(10.0%) (8.3%) (6.3%) (3.8%) (3.3%) (3.0%) (1.5%) (0.6%) (0.8%) 0.4% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (12.3%) (11.4%) (10.0%) (3.8%) (2.0%)(1.6%) (0.8%) (1.7%)(1.8%) (2.9%)(2.7%) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

June 2019 17

Trade adjustments had relied heavily on import cuts – now exports are picking up

Trade balance reached a surplus in 2018

Comments Exports of goods (€bn), 2003-2018 International trade of services (€bn), 2009-2018 Trade of goods breakdown by major trade partners (2017) ➢ Trade balance gap has closed from €(28.3)bn in 2008 to €0.8bn in 2018 ➢ This recovery, initially supported by a reduction of imports, is now driven by increasing exports (€34.7bn in 2018) and a large positive trade balance of services (€20.8bn in 2018) ➢ Tourism still has the potential to create higher surpluses (see p.19) ➢ Greece has a diversified product export base and a diversified client base. In 2017, 51% of exports went to EU countries and 49% outside EU; 53% of imports came from the EU and 47% from non-EU countries

Reduction of imports

⚫

A considerable bulk

• f the adjustment

came from a reduction in imports

• f goods

⚫

Imports of goods had culminated at €69bn in 2008 and declined steadily to €55bn in 2018 Exports Imports

Sources Bank of Greece, ELSTAT, MIT database

10% 7% 7% 6% 5% 5% 4% 4% 3% 3% Italy Germany Turkey Cyprus Lebanon Bulgaria UK USA Romania France 14 35 25 25 25 25 25 28 27 25 27 30 12 13 12 11 10 10 8 7 8 9 12 12 13 14 16 18 19 18 19 21 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Receipts Payments Trade balance of services 11% 8% 7% 6% 6% 6% 4% 4% Germany Italy Russia Iraq China Netherlands France Belgium-Luxembourg

June 2019 18 Net FDI evolution 2008-2018 (€bn) Increase in FDI over 2017-2018 – Sector breakdown (€m)

Improved business climate reflected in a new dynamic for FDIs

37 ranks increase in Doing Business index since 2010 reflecting favourable business climate

Net FDI in 2018 – Sector breakdown (€m)

⚫

In 2018, net FDI inflows have reached €3.6bn

⚫

Net FDI inflows are mainly driven by the service sectors which account for 76% of 2018 net inflows

⚫

The increase of net FDI inflows from €3.2bn in 2017 to €3.6bn in 2018 is mainly driven by the following sectors: Real Estate, Information and Communication activities, Private purchase of real estate, and Financial and Insurance activities

Sources Bank of Greece, Macrobond, Union Investment

3,204 3,606 663 329 327 302 (123) (208) (573) (316) Net FDI 2017 Real Estate Information and communication Private purchase of real estate Financial and Insurance activites Professional, scientific and technical activities Electricity, Gas and Air conditioning Accomodation and food service activites Other Net FDI 2018 €m % of total Financial and Insurance activites 895.6 24.8% Real Estate 752.3 20.9% Transportation and storage 745.5 20.7% Private purchase of real estate 655.5 18.2% Information and communication 230.1 6.4% Electricity, Gas and Air conditioning 167.1 4.6% Accomodation and food service activites 117.0 3.2% Wholesale and retail trade 70.7 2.0% Administrative and support service 68.2 1.9% Mining and Quarrying 22.2 0.6% Manufacturing 22.0 0.6% Other (140.0) (3.9%) Total net FDI 3,606.2 100% 3.1 1.8 0.2 0.8 1.4 2.1 2.0 1.1 2.5 3.2 3.6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Increase in FDI over 1986-2018

June 2019 19 Increasing revenues from tourism

⚫

Since 2005, the number of tourists visiting Greece has more than doubled, from 14 to 33 million tourists per year (including tourists from cruises). Travel receipts have increased at a lower rate due to a decrease in expenditures per jour

⚫

In 2015, Greece privatized 14 regional airports in popular tourist islands, including Corfu and Santorini, through a 40 years lease agreement

⚫

As part of the deal, private investors agreed to upgrade facilities with a €330 million investment before 2020 and €1.4 billion over the lease

⚫

As a result, tourism has increased and is expected to keep rising, with less constrained airports attracting more people from Western Europe and USA

Number of tourists¹ (million) and expenditure per journey (€) Main countries of origin Travel receipts 2003-2018 (€bn)

Tourism: an important contributor with yet high margins for growth

CAGR: 3.6% Note

• 1. Numbers include tourists from cruises

2005: 2018:

56% 36% Sources Bank of Greece, Eurostat

Potential growth of revenues expected from better travel infrastructure and key markets targeting

9.5 16.1

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

14 33 746 486

• 100

• 5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Number of tourists (million) Expenditures (€/tourist)

15% 10% 6% 5% 5% 4% 3% 3% 2% 2%

Germany United Kingdom Italy France Romania USA Netherlands Albania Cyprus Russia Other

19% 16% 8% 5% 2% 4% 5% 1% 3%1%

June 2019 20 Strategy to deal with NPLs NPL ratio (% of total loans, eop)

Major Greek banks successfully passed ECB’s stress test and continue to clean their balance sheets

A strengthening banking sector

Sources Bank of Greece, ECB

ECB’s stress test (May-18) ➢ The ECB conducted a stress test of Greece’s largest lenders for the period 2018-2020 ➢ Results show no capital plan is required despite the severe assumptions used for the adverse scenario (Real GDP growth of

• 1.3% in 2018 and -2.1% in 2019; House price decrease by -

17% over 2018-2020) ➢ To ensure that capital needs remain limited after the program’s exist, authorities are committed to the NPLs reduction plan ➢ Introducing the Out of Court settlement mechanism to facilitate debt resolution of viable enterprises ➢ Revising the Code of Civil Procedure to improve enforcement of secured creditors rights ➢ Improving the insolvency framework ➢ Developing a secondary market for NPLs by issuing legislation to regulate the transfer and servicing of NPLs ➢ Establishing a Credit Bureau for real estate transactions register

Piraeus Bank sold on July 2nd 2018 credit card and consumer loans equivalent to total legal claims of €2.24bn to APS

Performance in FY2018 ➢ Piraeus’ financial position continued to improve in 2018, with the bank recording positive pre-tax profit at the end of the fiscal year ➢ National Bank, Alpha and Eurobank continued to make progress in reducing provisions for impaired loans and meeting targets agreed with regulators

37% 37% 36% 37% 36% 35% 34% 34% 33% 30% 28% 21%

• 10%

20% 30% 40% 50% 60% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 2016 2017 2018 2019 Housing Consumption Business Total Targets

June 2019 21

• 2. Greece undergoes an economic turnaround
• 1. Current Greek debt profile
• 3. Effective fiscal consolidation and clear long-term budget trajectory

June 2019 22 ➢ The outstanding adjustment in 2016 rested mainly on fiscal reforms with lasting potential – the “parametric” fiscal savings in VAT, pensions, personal income tax – equating 2.5% of GDP in 2016 ➢ The additional packages legislated in 2017 and 2018 have yielded even more savings. Preliminary data indicates Greece has outperformed the 3.5% GDP target in 2018 ➢ Greece expects to also exceed the 2019 primary surplus target according to the 2019 Budget Commission view on fiscal savings (%GDP) Primary surplus targets and forecasts (programme terms, % of GDP)¹ Comments

Steep consolidation backed by lasting reforms

Supporting a clear long-term budget trajectory

High primary surplus objectives for a protracted period are meant to contain gross financing needs and protect debt service in the long term “Parametric” fiscal savings are related to the changes in tax rates and tax bases – they do not include savings related to reforms in tax admin. 0.3% 0.9% 1.0% 1.0% 0.2% 0.9% 1.4% 1.5% 0.2% 0.5% 1.1% 1.1% 0.1% 0.2% 0.5% 0.8% 0.7% 2.5% 4.0% 4.5% 2015 2016 2017 2018 VAT Pension PIT Other The government has consistently exceeded primary surplus targets

Sources European Commission Compliance Report (June 2018), MoF Economic Bulletin (April 2019), Greece 2019 budget

0.3% 0.5% 1.75% 3.5% 3.5% 3.5% 3.5% 3.5% 2.2% 0.7% 3.9% 4.1% 3.9% 3.6% 2015 2016 2017 2018 2019 2020 2021 2022 2023-2060 ESM targets Actual

Note 1 MoF provisional estimates for 2018

June 2019 23 Breakdown of state revenue (2019 budget) Breakdown of state expenditure (2019 budget) 2017 figures, 2018 estimates and 2019 forecasts (€bn)¹

Budget consolidation completed and 2019 budget on track

A 3.9% budget surplus expected in 2019

State revenue €53.8bn State expenditure €57.0bn 4.1% of GDP primary surplus in programme terms

Note 1 ESA standard accounting that differs from programme and enhanced surveillance accounting Source Greece 2019 budget

2017 2018 Realized Estimates Forecasts State government revenue 50.5 53.6 53.8 Taxes on production and imports 31.2 31.9 31.6 Current taxes on income, wealth 18.9 19.2 19.5 Capital taxes 0.2 0.2 0.2 Social contributions 0.1 0.1 0.1 Property income 0.0 0.0 0.3 Other 0.1 2.2 2.2 State government expenditure 57.8 58.3 57.0 Compensation of employees 12.0 13.5 13.0 Intermediate consumption 1.1 1.5 1.3 Social payments 2.2 1.2 0.2 Interest expenditure 6.3 7.1 7.0 Subsidies 0.1 0.2 0.2 Gross fixed capital formation 1.1 0.3 0.4 Capital transfers 28.7 26.6 26.1 Other 6.3 8.0 8.8 State Government Balance (7.3) (4.7) (3.2) Central Government Balance (2.1) (1.4) (0.8) General Government Balance 1.4 1.2 1.1 As % of GDP 0.8% 0.6% 0.6% General Government Primary Balance 7.0 7.6 7.4 As % of GDP 3.9% 4.1% 3.9% 2019

58.7% 36.3% 0.3% 0.1% 0.6% 4.0% Taxes on production and imports Current taxes on income and wealth Capital taxes Social contributions Property income Other 22.8% 2.2% 0.4% 12.3% 0.3% 0.7% 45.9% 15.4% Compensation of employees Intermediate consumption Social payments Interest expenditure Subsidies Gross fixed capital formation Capital transfers Other