Repblica Oriental del Uruguay Ministry of Economy and Finance - - PowerPoint PPT Presentation

República Oriental del Uruguay

Ministry of Economy and Finance August 2015 Montevideo

Uruguay at a Glance

Population ’13

3.3Million

Total surface area

176,215 km2

Human Development Index

51st over 186th

GDP 2014

US$ 57.5 Billion

GDP p/capita 2014

US$ 17,450

(Upper Income Economy / WB)

Real Growth Rate ’15 (e)

2.5%

Real Growth Rate ’05 - 14

5.4%

Unemployment Rate

6.8%

Ratings

Baa2 / BBB / BBB- 1

Credit Highlights

Structural Stability

Robust institutional framework and healthy social indicators continue to underpin political stability and promote a prolific business climate

Significant Economic Growth

Based on a strong growth of productivity, regional decoupling process is deepening

Consistent Macroeconomic Policies and Healthy External Indicators

Sustainable growth supported by robust FDI expansion and increase in export revenue. Improvement in the terms of trade in the near term

Proactive Debt Management Strategy

Longest-dated sovereign maturity profile in the region thanks to proactive liability management transactions. Consolidation of the pre-funding policy

1 2 3 4 2

Structural Stability Economic Performance External Sector Fiscal, Banking & Monetary Sector Debt Management

Structural Stability

Recognized Social and Institutional Stability

(Ranking position in LATAM and Worldwide, respectively)

1st 1st

18th

LATAM

WORLD 19th

2nd

• 1st

30th

Economic Climate Index

(Getulio Vargas Foundation & IFO 2015 - Last 10 Years Average)

Democracy Index

(The EIU 2014)

Worldwide Governance Indicators

(World Bank 2013)

Global Peace Index

(Institute for Economics & Peace 2014)

Economic Freedom Index

(Heritage Foundation 2015)

Corruption Perception Index

(Transparency International 2014)

Prosperity Index

(Legatum Institute 2014)

Press Freedom Index

(Reporters without Frontier 2015)

• 1th

3rd

43th

1st

29th

2nd

23rd

3

Rule of Law: Closer to High Income Countries

Country Score Global Ranking

Denmark 0.87 1 Norway 0.87 2 Sweden 0.85 3 Finland 0.85 4 Netherlands 0.83 5 New Zealand 0.83 6 Austria 0.82 7 Germany 0.81 8 Singapore 0.81 9 Australia 0.8 10 Republic of Korea 0.79 11 United Kingdom 0.78 12 Japan 0.78 13 Canada 0.78 14 Estonia 0.77 15 Belgium 0.77 16 Hong Kong SAR, China 0.76 17 France 0.74 18 United States 0.73 19 Czech Republic 0.72 20 Poland 0.71 21 Uruguay 0.71 22 Portugal 0.7 23 Spain 0.68 24 Costa Rica 0.68 25 Chile 0.68 26 United Arab Emirates 0.67 27 Slovenia 0.66 28 Georgia 0.65 29 Italy 0.64 30 Botswana 0.64 31 Romania 0.62 32 Greece 0.6 33 Ghana 0.6 34

Country Score Global Ranking

Croatia 0.6 35 South Africa 0.58 36 Hungary 0.58 37 Senegal 0.57 38 Malaysia 0.57 39 Bosnia and Herzegovina 0.57 40 Jordan 0.56 41 Jamaica 0.56 42 Tunisia 0.56 43 Macedonia, FYR 0.55 44 Bulgaria 0.55 45 Brazil 0.54 46 Mongolia 0.53 47 Nepal 0.53 48 Panama 0.53 49 Belarus 0.53 50 Philippines 0.53 51 Indonesia 0.52 52 Albania 0.52 53 Argentina 0.52 54 Morocco 0.52 55 Thailand 0.52 56 El Salvador 0.51 57 Sri Lanka 0.51 58 India 0.51 59 Serbia 0.5 60 Malawi 0.5 61 Colombia 0.5 62 Peru 0.5 63 Vietnam 0.5 64 Kazakhstan 0.5 65 Belize 0.49 66 Dominican Republic 0.48 67 Lebanon 0.48 68

Country Score Global Ranking

Moldova 0.48 69 Ukraine 0.48 70 China 0.48 71 Tanzania 0.47 72 Zambia 0.47 73 Kyrgyzstan 0.47 74 Russia 0.47 75 Cote d'Ivoire 0.47 76 Ecuador 0.47 77 Burkina Faso 0.47 78 Mexico 0.47 79 Turkey 0.46 80 Uzbekistan 0.46 81 Madagascar 0.45 82 Liberia 0.45 83 Kenya 0.45 84 Guatemala 0.44 85 Egypt 0.44 86 Sierra Leone 0.44 87 Iran 0.43 88 Nicaragua 0.43 89 Honduras 0.42 90 Ethiopia 0.42 91 Myanmar 0.42 92 Bangladesh 0.42 93 Bolivia 0.41 94 Uganda 0.41 95 Nigeria 0.41 96 Cameroon 0.4 97 Pakistan 0.38 98 Cambodia 0.37 99 Zimbabwe 0.37 100 Afghanistan 0.35 101 Venezuela 0.32 102

___________________________ Source: World Justice Project Uruguay

Overall Score Regional Rank Income Rank Global Rank 0.71 1/19 22/31 22/102 Factor Trend Factor Score Regional Rank Income Rank Global Rank Constraints on Government Powers

―

0.76 2/19 19/31 20/102 Absence of Corruption

―

0.78 1/19 18/31 18/102 Open Government

―

0.65 3/19 20/31 21/102 Fundimental Rights

―

0.79 1/19 16/31 16/102 Order and Security

―

0.72 1/19 29/31 57/102 Regulatory Enforcement

―

0.73 1/19 19/31 19/102 Civil Justice

―

0.71 1/19 17/31 17/102 Criminal Justice

―

0.54 3/19 29/31 36/102

Trending up Trending down High Medium Low

4

Significant Decrease in Poverty and Healthier Income Distribution

Poverty Gini Coefficient – 2013

___________________________ Source: Economic Commission for Latin America and the Caribbean, Statistical Yearbook for Latin America and the Caribbean 2013

0,55 0,54 0,51 0,44 0,38 0,0 0,1 0,2 0,3 0,4 0,5 0,6 BRAZIL (BBB) COLOMBIA (BBB) CHILE PERU URUGUAY (BBB-) Values between 0 and 1 2000 2000 2000 2000 2000 2005 2005 2005 2005 2005 2013 2013 2013 2013 2013 0,0 10,0 20,0 30,0 40,0 50,0 60,0 BRAZIL (BBB) CHILE COLOMBIA (BBB) PERU URUGUAY (BBB-) % of the total population

5

Economic Performance

Uruguay’s Economy is Expected to Keep Growing

GDP Growth Rate (%) GDP per Capita (US$, 2014)

___________________________ Source: Central Bank of Uruguay, IMF (WEO October 2014) and Ministry of Economy and Finance estimates. *TFP: Total Factor Productivity

Average annual growth rate of 5.4% between 2005 and 2014 was 50% explained by TFP growth

3,5% 2,5% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F

Average 1985-2004: 3.3%

3.030 4.535 6.625 8.394 10.836 11.076 11.799 12.777 14.911 17.450 5.000 10.000 15.000 20.000 Bolivia Paraguay Peru Colombia Mexico Brasil Panama Argentina Chile Uruguay

6

IMF Revised Down Economic Growth in South America for 2015; Uruguay with Marginal Review

WEO April 2014 WEO April 2015

___________________________ Source: IMF

Selected Western Hemisphere Economies: Real GDP Western Hemisphere Economies: Real GDP

(Annual percent change unless noted otherwise)

Real GDP Projections 2013 2014 2015 North America 1.8 2.8 3.0 United States 1.9 2.8 3.0 Canada 2.0 2.3 2.4 Mexico 1.1 3.0 3.5 South America 3.2 2.3 2.7 Brazil 2.3 1.8 2.7 Argentina 4.3 0.5 1.0 Colombia 4.3 4.5 4.5 Venezuela 1.0

• 0.5
• 1.0

Peru 5.0 5.5 5.8 Chile 4.2 3.6 4.1 Ecuador 4.2 4.2 3.5 Bolivia 6.8 5.1 5.0 Uruguay 4.2 2.8 3.0 Paraguay 13.0 4.8 4.5 Central America 4.0 4.0 4.0 Caribbean 2.8 3.3 3.3 Memorandum Latin America and the Caribbean 2.7 2.5 3.0 Excluding Argentina 2.5 2.8 3.2 Eastern Caribbean Currency Union 0.5 1.4 1.8

(Annual percent change unless noted otherwise)

Real GDP Projections 2014 2015 2016 North America 2.4 3.0 3.0 United States 2.4 3.1 3.1 Canada 2.5 2.2 2.0 Mexico 2.1 3.0 3.3 South America 0.7 (0.2) 1.3 Brazil 0.1 (1.0) 1.0 Argentina 0.5 (0.3) 0.1 Colombia 4.6 3.4 3.7 Venezuela (4.0) (7.0) (4.0) Chile 1.8 2.7 3.3 Peru 2.4 3.8 5.0 Ecuador 3.6 1.9 3.6 Bolivia 5.4 4.3 4.3 Uruguay 3.3 2.8 2.9 Paraguay 4.4 4.0 4.0 Central America 4.0 4.2 4.3 Caribbean 4.7 3.7 3.5 Memorandum Latin America and the Caribbean 1.3 0.9 2.0 Excluding Argentina 1.4 1.0 2.2 Eastern Caribbean Currency Union 1.7 2.0 2.1

7

A Very Well – Diversified Economy

GDP Breakdown by Sector 2014 Real GDP Growth and Contribution by Sector (QoQ)

___________________________ Source: Central Bank of Uruguay

Primary sector 7,6% Manufacturing 12,3% Energy 2,3% Construction 9,3% Commerce, restaurants and hotels 13,0% Transportation and communications 5,9% Financial services 4,7% Real estate 15,9% Other services 29,0% (2%) 0% 2% 4% 6% 8% 10% 12% 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 Private Consumption

• Gov. Consumption

Gross Private Investment Net Exports Gross Public Investment GDP Growth

8

Investment has been a Key Driver of Growth Over the Past Years…

___________________________ Source: Central Bank of Uruguay

5 10 15 20 25 1985 1989 1993 1997 2001 2005 2009 2013

Total Investment (% of GDP)

Average 1985-2004: 14.6% Average 2005-2014: 20.0%

9

…even Though Uruguay has not Benefited as much from the Improvement in ToT Over the Past Decade

___________________________ Source: World Bank

GDP Growth and Terms of Trade – 2005/2012 (Annual Average in %)

1 2 3 4 5 6 7 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 GDP Growth Terms of Trade Growth Uruguay Mexico Chile Brazil Colombia Peru

10

Decoupling from the Regional Downturn has Become More Visible in the Last Few Years

Real GDP Growth (2012-2014 (Average) Real GDP Growth (2015(1))

___________________________ Source: Central Bank of Uruguay

• 1. Market projections

Uruguay continues to grow faster than its neighbours

4,0 1,2 0,7 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 Uruguay Brazil Argentina 2,5 (2,0) (1,0) (2,5) (2,0) (1,5) (1,0) (0,5) 0,0 0,5 1,0 1,5 2,0 2,5 3,0 Uruguay Brazil Argentina

11

Solid Growth Performance has been Accompanied by a Rising Employment Rate

___________________________ Source: National Bureau of Statistics

5 6 7 8 9 10 11 12 13 52 53 54 55 56 57 58 59 60 61 mar-06 mar-07 mar-08 mar-09 mar-10 mar-11 mar-12 mar-13 mar-14 mar-15 Employment Unemployment

Unemployment and Employment Rates (in %) 12

External Sector

Structural Increase in Investment Levels

Total Investment (% of GDP) FDI (% of GDP) FDI and Current Account Balance (% of GDP)

2.5% 3.3% 3.4% 4.6% 5.3% 0% 1% 2% 3% 4% 5% 6% Units

Net FDI – 2014 (% of GDP)

0% 5% 10% 15% 20% 25% 30% 1985 1989 1993 1997 2001 2005 2009 2013

Average 2005-2014: 20.0% Average 1985-2004: 14.6%

(1%) 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% II.2004 II.2005 II.2006 II.2007 II.2008 II.2009 II.2010 II.2011 II.2012

• II. 2013

II.2014 Current account FDI Financial Needs

___________________________ Source: Central Bank of Uruguay FDI: Foreign Direct Investment - CAD: Current Account Deficit ___________________________ Source: Source: Standard & Poor´s Average 2005-2014: 5.7% Average 1985-2004: 0.8%

13

Significant FDI Inflows from a Broad Group of Countries

 Joint press release with the Ministry of Foreign Affairs  Signing of the Japan-Uruguay Investment Agreement  On January 26, 2015, H.E. Ms. Keiko Tanaka, Ambassador Extraordinary and Plenipotentiary of Japan to Uruguay, and H.E. Mr Luis Alberto Porto, Acting Minister of Foreign Affairs of the Oriental Republic of Uruguay, signed the Agreement between Japan and the Oriental Republic

• f Uruguay for the Liberalization, Promotion and Protection of Investment (Japan–Uruguay Investment Agreement) in Montevideo, Uruguay

14

Beneficial Investment Promotion Systems

 Domestic and foreign investors are treated equally  Attractive investment promotion system that grants specific guarantees to the investor  Exemptions from taxes for up to 100% of the amount invested  Free transferability of capital and profits overseas  No price or exchange rate controls  No restrictions on hiring foreign staff  Fiscal and Banking Secrecy  Intellectual Property Laws under the WTO  Residency permits can be obtained in three months

1998 2007 2008 2009 2010 2011 2012

 There is no discrimination between foreign and domestic investors  Prior authorisation or registration are not required  There are no restrictions to capital and profit transfers from foreign investments 2007 – Decree No 455/007 Including:  Universal benefits for all types of companies and activities  Objective and measurable criteria for the granting of tax exemptions 1998 – Investment Law (Law No 16,906) 2012 – Decree No 2/2012  Introduction of quality criteria in the promoted

• bjectives

15

Exports have Remained Robust, Although Showing Some Deceleration….

2.000 4.000 6.000 8.000 10.000 12.000 14.000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Million of USD Good Exports Services Exports

Good Exports / Service Exports

500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Million of USD Tourism Other services (software, transport, logistics, etc)

Tourism / Other Services

___________________________ Source: Central Bank of Uruguay

16

Exports Market Diversification Along with Decreased Dependence from Argentina and Brazil

Brazil 33% Argentina 13% China 6% USA 6% Germany 6% UK 4% Italy 3% Netherlands 3% Spain 3% Others 25%

Exports Breakdown By Markets

___________________________ Source: Central Bank of Uruguay & Uruguay XXI

Brazil 18% China 17% Free Trade Zones 12% Argentina 4% Venezuela 5% Russia 3% USA 5% Germany 3% Others 33%

1995 2014

17

Current Account Deficit Moderating Thanks to Drop in Oil Prices

Latin America: Oil (Energy)-linked Components of the Balance of Payments and Current Account Forecast

Last Available (4Q Sum)

• Curr. Acc. Bal.

Energy Trade Balance Other Energy Flows Energy BoP 2014 est. 2015 fcst Net % GDP Exports Imports FDI (or debt) Dividends % GDP % Total % GDP %Total % GDP %Total % GDP %Total % GDP % GDP % GDP Latin America 1.9 4.2 21.0 2.4 16.0 0.3 10.2 0.1 3.4 2.0 (2.9) (3.7) Oil-dependent 2.0 2.2 7.0 0.2 1.3 0.0 2.5 0.0 0.0 2.0 0.2 (0.5) Venezuela 26.9 30.1 96.2 3.2 18.0 0.6 35.0 0.0 0.0 27.5 3.0 (6.8) Large net oil exporters 0.6 0.9 5.6 0.2 1.4 0.1 3.2 0.1 2.5 0.6 (0.4) (0.5) Ecuador 7.7 13.7 52.0 6.0 24.0 0.3 45.0 na na 8.0 (0.6) (3.0) Colombia 7.1 9.0 67.2 1.9 14.0 1.3 35.0 1.6 35.0 6.8 (5.2) (6.5) Limited net oil exposure (0.4) 1.2 8.4 1.6 12.2 0.1 4.5 0.0 0.9 (0.3) (2.6) (2.7) Mexico 0.2 2.4 11.5 2.2 10.5 0.0 0.2 0.0 0.0 0.2 (2.1) (2.5) Peru (0.6) 2.6 12.2 3.2 14.4 0.3 3.0 0.0 0.0 (0.3) (4.1) (4.0) Brazil (0.8) 1.2 11.3 1.9 18.4 0.1 5.4 na na (0.6) (4.4) (4.3) Argentina (1.3) 0.9 6.0 2.2 16.0 0.6 22.5 0.2 10.0 (0.9) (1.1) (1.5) Large net oil importers (0.3) 0.0 0.0 0.3 1.1 0.0 0.0 0.0 0.0 (0.3) (0.1) 0.1 Uruguay (3.4) 0.0 0.0 3.4 15.7 0.0 0.0 0.0 0.0 (3.4) (4.5) (3.6) Chile (4.7) 0.0 0.0 4.7 18.1 0.0 0.0 0.0 0.0 (4.7) (1.1) (0.4) ___________________________ Aggregate figures are % of Latam GDP, country-specific figures are % of country GDP Source: National statistics agencies, central banks, J.P. Morgan Source: LATAM Microeconomic Outlook/JP Morgan May 2015

18

The Ministry Estimates a Significant Improvement in the Current Account Balance During 2015

Oil Imports (USD Million)  Oil imports represented 2.4% of GDP in 2014, 13% of total imports

• f goods

 Most of the drop of oil imports between 2012 and 2014 is because

• f volume (more rain and more

renewable energy sources), not because of prices  In 2015, a 10% increase in imports volume and a 33% decrease in imports prices would result in a net decrease of USD 453 million in oil imports (0.8% of GDP)

1.375 922 200 400 600 800 1.000 1.200 1.400 1.600 1.800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

___________________________ Source: BCU and own estimations. / Oli Barrel estimated at USD 60

19

Comfortable External Liquidity Position

International Reserves(1) International Reserves / GDP(2) […] Change in International Reserves

18.202 4.000 8.000 12.000 16.000 20.000 2002 2004 2006 2008 2010 2012 2015YTD USD Million 12,8% 14,4% 17,1% 29,9% 32,3% 0% 5% 10% 15% 20% 25% 30% 35% Colombia Chile Brazil Peru Uruguay Jan-12 Jan-12 Jan-12 Jan-12 Jan-15 Jan-15 Jan-15 Jan-15 10.000 20.000 30.000 40.000 50.000 60.000 70.000 Peru Colombia Chile Uruguay USD Million (as of January 2015)

30% 46% 11% 69%

Jan-12 Jan-15 340.000 350.000 360.000 370.000 380.000 Brazil

6%

___________________________ 1. Source: Central Bank of Uruguay 2. Source: IMF, World Economic Outlook Database and Central Banks

20

International Reserve Buffers have Increased in most LAC Countries, Standing out Uruguay’s Position

International Reserve Buffers have Increased in Most Countries

___________________________ Source: Moody’s Sovereign Outlook - Latin America: Credit profiles stabilizing amid lower growth, moderate external vulnerabilities“ March 2015 Foreign Exchange Reserves, % of GDP 5 10 15 20 25 30 35 40 45 Bolivia Uruguay Peru Chile Paraguay Brazil Mexico Costa Rica Nicaragua Honduras Colombia Guatemala El Salvador Suriname Panama Argentina Ecuador Venezuela 2006 2010 2015F 2015 Median

21

Fiscal, Banking & Monetary Sector

Sustainable Fiscal Policy Decreased Public Net Debt-GDP Ratio

Global Fiscal Result (% of GDP) Global Public Debt (% of GDP)

72% 59% 56% 61% 58% 58% 63% 35% 31% 27% 26% 23% 21% 22% 0% 20% 40% 60% 80% 100% 2009 2010 2011 2012 2013 2014 2015E Gross debt Net debt (1,7%) (1,1%) (0,9%) (2,8%) (2,3%) (3,5%) (3,5%) 1,2% 1,9% 2,0% (0,2%) 0,4% (0,6%) (0,3%) (5%) (3%) (1%) 1% 3% 5% 2009 2010 2011 2012 2013 2014 2015 (E) Overall Public Sector Balance Primary Balance

___________________________ Source: Ministry of Economy and Finance and Central Bank

22

Sound Banking System

Deposits of Residents and Non Residents in Foreign Currency Deposits in Foreign Currency Non Financial Sector Credits in Foreign Currency Non Residents Deposits in Foreign Currency

___________________________ Source: Central Bank of Uruguay 4.000 8.000 12.000 16.000 20.000 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 USD Million Residents Non-residents 60% 70% 80% 90% 100% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (% of total deposits) 40% 50% 60% 70% 80% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (% of total clients) 0% 10% 20% 30% 40% 50% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (% of total deposits in FC)

23

Inflation is Decelerating on the Back of Central Bank’s Restrictive Monetary Policy

Consumer Prices Evolution

___________________________ Source: Central Bank of Uruguay and National Bureau of Statistics

24

0% 2% 4% 6% 8% 10% 12%

Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Inflation Expectations Observed Inflation CBU Target CBU Monetary Interest Rate

Inflation is Decelerating on the Back of Central Bank’s Restrictive Monetary Policy

M1’ – M1 Plus Domestic Saving Deposits

___________________________ Source: Central Bank of Uruguay and National Bureau of Statistics

24,0% 23,9% 12,2% 8,6% 5 10 15 20 25 30 2011Q 1 2011Q 2 2011Q 3 2011Q 4 2012Q 1 2012Q 2 2012Q 3 2012Q 4 2013Q 1 2013Q 2 2013Q 3 2013Q 4 2014Q 1 2014Q 2 2014Q 3 2014Q 4 2015Q 1 (YoY)

24

Debt Management

Ample Liquidity to Manage Potential Disruptions in Global Financial Conditions

 IDB – USD 550 million  World Bank – USD 520 million  FLAR – USD 470 million  CAF – USD 400 million Contingent Credits Lines Amount to Nearly USD 2bn, around 3.5% of GDP

___________________________ Source: Debt Management Unit, Ministry of Economy and Finance

4.3% 3.5% 1.2% 1.3% 0% 2% 4% 6% 8% 10% 2015Q2 2015Q2 2016 (% of GDP) Central Government Liquid Assets as of June 2015 Contingent Lines Amortizations

25

More conservative prefunding policy

___________________________ Source: A Note on the Optimal Precautionary Reserves of the Uruguayan Treasury: an Access-at-Risk Approach». Umberto DellaMea (2008)

The market should be closed no more than 270 days with probability 99% The market should be closed no more than 90 days with probability 99%

0% 5% 10% 15% 20% 25% 1 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 Likelihood to be out of the market 0% 5% 10% 15% 20% 25% 1 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 Likelihood to be out of the market (in days)

 Assumption: i) Uruguay was not willing to borrow at levels

• f 200bps over EMBI+ or ii) EMBI+ traded 20% or more

above its long term trend  Assumption: i) Uruguay was not willing to borrow at equivalent levels of the EMBI+ January 1999 – January 2008 January 2007 – June 2015

Significance Level: 1% Significance Level: 1%

26

Proactive Debt Management of Central Government has Reduced Roll-over, FX and Interest Risk

500 1.000 1.500 2.000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Central Government Debt Amortization Profile

2005: 6.4% of GDP 2006: 9.0% of GDP Average life 7.4 years As of December 2004 (USD Million) 500 1.000 1.500 2.000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 As of June 2015 (USD Million) Average life 15.5 years 2015: 1.2% of GDP 2016: 1.3% of GDP

___________________________ Source: Debt Management Unit, Ministry of Economy and Finance

27

Proactive Debt Management of Central Government has Reduced Roll-over, FX and Interest Risk

7,4 15.5 2 4 6 8 10 12 14 16 18 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Q1

Average Time to Maturity (in Years)

11 49 10 20 30 40 50 60 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Q1

Debt in Local Currency (% of Total) Debt at Fix Rate (% of Total)

___________________________ Source: Debt Management Unit, Ministry of Economy and Finance

77 94 20 40 60 80 100 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Q1

28

Uruguay has been – after Chile – the LAC Sovereign that Improved the Most

Argentina Bahamas Barbados Belize Bermuda Bolivia Brazil Chile Colombia Costa Rica Dominican Republic Guatamala Honduras Jamaca Mexico Nicaragua Paraguay Peru Suriname SVG Trinidad & Tobago Uruguay Venezuala 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FX Government Debt (% of Total, 2005)

Credit Negative Credit Positive

FX Government Debt (% of Total, 2014E)

Foreign Currency Share of Government Debt: 2014 vs 2005

From 90% in 2005 to 48% in 2014

___________________________ Source: Moody’s Sovereign Outlook - Latin America: Credit profiles stabilizing amid lower growth, moderate external vulnerabilities“ March 2015

Particularly in relation to debt exposure to foreign currency over the last decade

29

Uruguay’s Gross Financing Needs are Relatively Small

15,2 9 4,4 4,1 Brazil Mexico Uruguay Colombia

Central Government Gross Financing Needs 2015 (% of GDP)

___________________________ Source: Fiscal Monitor IMF, October 2014 and Ministry of Economy and Finance (Gross Financing Needs as Budget Deficit + Maturing Debt)

30

Uruguay Continues Doing Well Compare with its Latam Peers

140 165 190 215 240 265 290 315 340 365 390 415 06-oct-14 06-nov-14 06-dic-14 06-ene-15 06-feb-15 06-mar-15 06-abr-15 06-may-15 06-jun-15 06-jul-15 06-ago-15 pbs EMBI Uruguay EMBI Colombia EMBI Mexico EMBI Brazil

JP Morgan EMBI (in pbs)

___________________________ Source: Bloomberg

31

CDS: Uruguay has Stayed at Around 150bps but Improved in Relative Value

5 Years Credit Default Swaps (in pbs)

___________________________ Source: Bloomberg

25 50 75 100 125 150 175 200 225 250 275 300 325 02-ene-12 02-mar-12 02-may-12 02-jul-12 02-sep-12 02-nov-12 02-ene-13 02-mar-13 02-may-13 02-jul-13 02-sep-13 02-nov-13 02-ene-14 02-mar-14 02-may-14 02-jul-14 02-sep-14 02-nov-14 02-ene-15 02-mar-15 02-may-15 pbs Uruguay Brazil Colombia Mexico Standard Deviation of 5 Years CDs Mexico: 17.8 Uruguay: 24.5 Colombia: 24.8 Brazil: 44.7

32

Main Challenges for Debt Management



Inertial pressure for re-dollarization of debt



Increasing rates as U.S. monetary policy continues to normalize



Change in local and external investors preferences towards hard-currency bonds



Spillovers from the regional deterioration

33

Financial Strengths



Uruguay has a significantly less risky Government debt structure



Has built a sizable financial shield to reduce the vulnerabilities that affected the country in the past This provides flexibility when deciding the issuance strategy, optimizing risk and cost Underpins the credit quality of the sovereign

34

Strategic Guidelines for Debt Management



Continue reducing the rollover, FX and interest rate risk



Maintain a conservative pre-funding policy to cover debt services payments for the following 12 months



Obtain an optimal mix of multilaterals and private debt



Achieve a more dynamic domestic market



Diversify our sources of funding and broaden the investor base

35

Toolbox



Broaden the use of derivatives (hedging against FX and interest rate risk)



Further develop of the local market (boost liquidity and extend the yield curve in LC)



Use of multilateral debt as a growing funding source



Reinforcement of contingent credit lines

36