INVESTOR PRESENTATION

July 2019

July 17,
Executive
summary
● On the path to a balanced fiscal budget
○ 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.
○ 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

○ 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

○ 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
1. Fiscal update

2. Macroeconomic Update

3. Systemic Competitiveness
a. Domestic Capital Markets
b. Energy
c. Infrastructure
Fiscal target is being
met
ACCUMULATED PRIMARY RESULT
% of GDP

4 consecutive
years
of consistently improving fiscal results
since the beginning of the
current
administration.

4
Income grows systematically above
spending
INTERANNUAL GROWTH OF INCOME AND SPENDING
In percentage

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
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
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.

6
Primary fiscal balance will be achieved in
2019
PRIMARY RESULT
As % of GDP

It’s been 10 years

since the last time the national
government achieved a primary
balance.

7
Government spending is at the lowest level in 10
years
NATIONAL PRIMARY SPENDING (SPNF)
As % of GDP

8
Primary spending has fallen every year in this
administration
PRIMARY SPENDING
Inflation-adjusted pesos, % Change

9
Provinces have converted fiscal deficits into
surpluses
AGGREGATE PROVINCIAL FISCAL RESULT
In millions of pesos

10
Almost every province has improved its fiscal
performance...
PROVINCIAL PRIMARY RESULTS
As percentage of revenues

6 Provinces
had a primary surplus in 2015.

17 Provinces
had a primary surplus in 2018.

11
…measured on a primary and financial
basis
PROVINCIAL FINANCIAL RESULTS
As percentage of revenues

6 Provinces
had a financial surplus in 2015.

11 Provinces
had a financial surplus in 2018.

12
Provinces are increasingly responsible for their fiscal
performance
PROVINCIAL TAX REVENUES
As percentage of national tax revenues

13
1. Fiscal update

2. Macroeconomic Update

3. Systemic Competitiveness
a. Domestic Capital Markets
b. Energy
c. Infrastructure
Monetary policy has yielded a reduction in FX
volatility
NOMINAL EXCHANGE RATE
Pesos per dollar

15
Monetary base has been reduced significantly in real
terms
MONETARY BASE + LEBAC + LELIQ CENTRAL BANK INTEREST BEARING LIABILITIES
Million ARS of May-2019 As a proportion of international reserves

201 2016 201 201

5 2017 8 9
4,00 ene
dic feb
0
3,50
0
nov 3,00 mar
0
2,500
oct abr
2,000

sep may

ago jun
jul
16
Economic activity is
recovering

17
Growth of exports has resumed since
2016
TOTAL EXPORTS
LTM in USD bn

Total

Without
grains
&
oilseeds

18
Nine months of trade surpluses reverted the trade
balance
TRADE BALANCE
LTM in USD Bn

19
Sectorial evidence of growth in
exports
OIL & GAS TRUCKS (PICK-UPS)
USD mm USD mm

NON - TRADITIONAL MINING BEEF

USD mm USD mm

Fuente: INDEC 20
1. Fiscal update

2. Macroeconomic Update

3. Systemic Competitiveness
a. Domestic Capital Markets
b. Energy
c. Infrastructure
Converting USD debt to pesos

LETES AND LECAPS HELD BY PRIVATE INVESTORS

USD bn equivalent

22
Conservative maturity
profile
LETES AND LECAPS HELD BY PRIVATE INVESTORS LECAPS MATURITIES HELD BY PRIVATE INVESTORS
USD bn equivalent ARS Bn

23
Debt securities payments by creditor
type

Only 30%
of bond maturities coming due in 2020 are
denominated in hard currency.

24
Digitalization have simplified domestic capital market
access
COMPANIES HAVING ACCESS TO CAPITAL MARKETS FINANCING
Number of Issuers

The number of companies obtaining

capital markets financing has
grown

by +33%.

SMEs’ access to financing in

has
the capital markets

Doubled.

Source: CNV. 25
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.
More investors in mutual funds thanks to access
simplification
INVESTORS IN MUTUAL FUNDS
Total count of registered accounts
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.

+260 thousand
investors through were added through
digital platforms.

26
Source: CNV based on information provided by CAFCI and ACDI
Stronger market structure through the composition of
players
EVOLUTION OF REGULATED AGENTS BY CNV
Number of registered entities

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
Note: Neither brokerage agents, nor collective investment agents are included. Source: CNV.
1. Fiscal update

2. Macroeconomic Update

3. Systemic Competitiveness
a. Domestic Capital Markets
b. Energy
c. Infrastructure
Energy subsidies remain on a reduction
path
ENERGY SUBSIDIES
Percentage of GDP

29
The energy trade deficit has been wiped
out
ENERGY TRADE BALANCE
USD Bn

30
Market prices stabilize with reduced Government
participation
NATURAL GAS DOMESTIC PRICE AND GOVERNMENT PARTICIPATION
In USD/MMBTU

31
Natural gas exports are taking
off
MONTHLY NATURAL GAS EXPORTS 2018 - APRIL 2019
MCM/DAY

32
The renewable energy segment is
underway

In commercial Under
operation constructio
n
Number of
42 98
projects

Power
1.200 MW 3.580 MW
capacit
y
140 projects in commercial Estimate
USD 1.8 Bn USD 5.4 Bn
operation and construction entailing a nvestmen
d
it
total investment of USD 7.2 Bn and
generating 4,790 MW
33
1. Fiscal update

2. Macroeconomic Update

3. Systemic Competitiveness
a. Domestic Capital Markets
b. Energy
c. Infrastructure
We are building the roadways that were not being built before

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
35
Double carriage trucks are reducing transportation
costs

+30% to 60%
of load than a conventional
truck

-30%
in transportation costs
We have authorized the use of climbed-load and
double carriage trucks in more than
40 thousand km of national roads and
36
138 thousand km of provincial roads
Trains have been improved to reduce transportation
time

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)

+ 80%
2015-2018

Belgrano cargas freight traffic reached its

high since 1994 as it carried 2,079 million
tonnes during 2018
 Port procedures simplification has reduced costs
Exports Imports
Cost per container in Cost per container in
USD USD
- 61% - 17%

Elimination of TAP obligation

KEY Reduction of sweeping and cleaning costs (-66%)

Elimination of Port Support Area

RESOLUTIONS Reduction of trailer tariff

Elimination of enclosing 38
USD 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
Modernization of 90% of the country’s
airports
18 years 4 years
COMPLETED
7
RUNWAYS 13
20
NEW TERMINALS 7
NEW
7
LIGHTING SYSTEMS
29

NEW
CONTROL TOWERS 1 7

40
 Flights revolution: connecting the provinces

December 2015 May 2019 Today, more Argentines

travel within the country
without needing to stop
94 153 +63% over in Buenos Aires
Domestic flight Domestic flight
connections connections More federalism
Proportion of passengers not
connecting through Buenos Aires Jan-
May.

29 57 +97%
Not going Not going
through through
Buenos Aires Buenos Aires

41
 Flights revolution: connecting the provinces and the
world
December 2015 May 2019

Arrival of low cost

92 125 +36% international airlines
International flight International flight
connections connections

15 39 +160%
Not going Not going
through through
Buenos Buenos Aires
Aires

42
Roadway works to improve the quality of
life

Travel time is reduced

69% of urban buses in by 30%
the Greater Buenos
117 Metrobus systems in the country
Aires travel through a
● 15 completed
Metrobus system
● 2 under construction

are used by 2.3 M users every day

Metrobus
La Matanza 43
INVESTOR PRESENTATION
July 2019