1. Carlos Oliva Neyra. Minister of Economy and Finance
PERU Macroeconomic overview
Carlos Oliva Neyra. Minister of Economy and Finance
September 14th., 2018
“PERU: LEADING GROWTH ACROSS THE REGION”

2. Content 1 Macroeconomic fundamentals 2 Current economic situation 3
Economic policy measures 3
Debt management 4

3. Three reasons why to invest in Peru
Macroeconomic stability
Investment-friendly environment
Openness to the world

4. Macroeconomic stability: healthy balances International reserves
Inflation
(%, average )
Public debt
(% of GDP, 2017)
International reserves
(% of GDP, 2017)
Country risk
(bps, average 2017)
264
256
84.0
194
145
54.2
49.4
130
28.2
6.7
23.6
23.3
18.0
5.2
4.6
14.7
14.3
13.7
3.3
2.8
Bra
Col
Mex
Chi
Per
Bra
Col
Mex
Chi
Per
Bra
Col
Mex
Chi
Per
Bra
Col
Mex
Chi
Per
Source: International Monetary Fund (World Economic Outlook, April 2018).

5. Macroeconomic stability: strong economic institutions
The macro-fiscal framework is based on rules that seek a predictable, responsible, and transparent management of public finances, following best practices in developed countries.
Autonomous and independent central bank. Monetary policy is conducted under an inflation targeting scheme with foreign exchange flexibility.
Under a market-oriented economy that promotes openness and a legislation that gives the same treatment to local and foreign investors.

6. (US$ billion and % of exports to the world, 2017)
Openness to the world
Peru: total exports
(US$ billion and % of exports to the world, 2017)
USD 8.5 billion
Europe
(20.3%)
Peru has implemented Free Trade Agreements (FTA) with 21 countries that represent 75% of the world GDP and 90% of total world trade.
The Pacific Alliance, which includes Chile, Colombia, and Mexico, is a platform to jointly promote investment and financial integration.
Accession process to the OECD will support continuity of important structural reforms on institutions, informality, innovation, among others.
USD 19.1 billion
Asia
(44.2%)
USD 8.1 billion
North America
(19,2 %)
USD 6.9 billion
LAC
(14,7%)
USD 0.3 billion
Africa
(0.7%)
USD 0.3 billion
Oceania
(0.9%)
Source: Sunat and Mincetur.

7. Content 1 Macroeconomic fundamentals 2 Current economic situation 3
Economic policy measures 3
Debt management 4

8. Current economic activity upturn is driven by domestic demand
GDP
(Real % annual change)
Domestic demand1
(Real % annual change)
Fiscal stimulus
Private investment
1/ Inventories are not included.
Source: BCRP, INEI.
Slide pasado.

9. Total investment has fostered the upturn of employment
Public and private investment
(Real % annual change)
Formal employment1
(% annual change)
1/ Information based on Sunat’s electronic payrolls.
Source: BCRP, MEF.
Slide pasado.

10. Latin America: credit ratings and outlooks
Peru continues as one of the few economies with no credit rating changes
Fiscal balance1
(% of GDP, 12-month rolling sum)
Latin America: credit ratings and outlooks
S&P
Moody’s
Fitch
Perú
BBB+ A3
BBB+
Chile A+ A1 A
Colombia
BBB-
Baa2
BBB
México
BBB+ A3
BBB+
Brazil
BB-
Ba2
BB-
Stable outlook
Negative outlook
Stable outlook but recent downgrade in the last 12 months
1/ Non-financial public sector overall balance.
Source: S&P, Moody’s, Fitch, BCRP, MEF.

11. Macroeconomic strength is important in financial turbulence periods
Emerging markets: MSCI equity index1
(Index)
2018: Financial indicators1
Exchange rate
(% change, YTD)
Sovereign risk
(Diff. pbs., YTD)
Peru has a strong external position recognized by global investors: low level of short-term debt, high net international reserves and current account financed by long-term investment.
1/ As of September 11th., 2018.
Source: Bloomberg.

12. Latin America: GDP forecasts
Peru will continue to lead regional growth with sound fiscal fundamentals
Latin America: GDP forecasts
(Real % annual change, average )
Peru: fiscal balance
(% of GDP) -
1.0 -
1.0 -
1.9 -
2.1 -
2.7 -
3.1 -
3.0 -
2.9
MMF -
3.5
Current forecast
2017
2018
2019
2020
2021
Source: LatinFocus Consensus Forecast - august 2018, MEF forecasts.

13. Content 1 Macroeconomic fundamentals 2 Current economic situation 3
Economic policy measures 3
Debt management 4

14. The government has designed guidelines to increase potential growth1
Strengthen growth
Modernization of the public sector
Foster competitiveness 2 3
Source: MEF.

15. The goals are to promote economic growth and increase citizens’ welfare
Achieve growth rates of 5% in the coming years
Reduce poverty
Underpin potential growth
Improve country’s general welfare
Source: MEF.

16. Content 1 Macroeconomic fundamentals 2 Current economic situation 3
Economic policy measures 3
Debt management 4

17. Lines of defense to finance Economic Growth Fiscal Stabilization Fund
The sources of financing come from asset management and internal and external liabilities
Lines of defense to finance Economic Growth
Assets
Liabilities
Fiscal Stabilization Fund
Debt Capital Markets
Fund size as of July 31, 2018
Local Market
International Market
USD 6,388 million
National Emergency
Savings Mechanism
Soberanos Bonds
Global Bonds
Stock as of July 31, 2018
USD 9,336 mn
EUR 2100 mn
International Crisis
Sources of Funds
Other Non Financial Public Sector Financial Assets
Multilateral and Bilateral Loans
CAF BID BIRF Otros
Secondary Liquid Reserve
Contingency loans
As of July 31, 2018
USD 4,000 million

18. “solarize” Debt and develop local debt capital markets
Composition of Public Debt by Currency
(% of total debt)
Liability Management (LM)
(Millions of dollars)
LM 2016
LM 2017
LM 2014
LM 2015
soles
EUR
USD
No USD paper
No New money
* Jun. 2018

19. Peru has significantly increased its Soberanos debt stock by focusing on international format debt issuances (GDNs and Euroclear)
Since 2005, Peru has successfully increased its Soberanos (PEN) debt stock by 10.9x compared to a growth of 1.8x for its Global Bonds (USD and EUR) debt stock…
Debt Capital Markets
Local Market
Sovereign bonds and Global bonds
(soles MM, USD/EUR MM, nominal)
Development of the debt market through sovereign bond issues in soles
10.9x
Soberanos
linkers
Treasury bills
Local
GDN’s
Euroclear
International Market
Taking advantage of Windows of opportunity to maintain liquidity/efficient yield curves
1.8x
USD Global Bonds
EUR Global Bonds

20. Primary Market Activity Secondary Market Activity
The solarization strategy has been successful in improving market
Liquidity in primary and secondary markets
Primary Market Activity
(PEN million)
Secondary Market Activity
(PEN million)
+32%
Monthly average
14,211
Monthly average
10,760
+56%
+42%
Monthly average
6,906
Monthly average
4,853
* Aug. 2018

21. Sovereign Bonds: Non- resident investors
Diversification of non- resident investor base for local bonds
Issuance S/ 10 billion 6.15% Sovereign Bonds (Issuance that had a demand exceeding 30bn and that was settled through Euroclear)
Sovereign Bonds: Non- resident investors
(% of total investors)
Issuance of S/ 10.3 billion 6.35% Sovereign Bonds (One of the largest local currency issues in emerging markets, the same that reduced liabilities in USD)
Issuances Benchmark
* 41.9%
7.840% Aug 2020s
S/ 4,196 millions
Date.; Nov 10
5.700% Aug 2024s
S/ 7,128 millions
Date; Nov 14
6.950% Aug 2031s
S/ 4,392 millions
Date; Mar 15
6.350% Aug 2028s
S/ 10,251 millions
Date; Sep 16
6.150% Aug 2032s
S/ 10,000 millions
Date; Jul 17
* Aug. 2018

22. Windows of opportunity in USD and EUR
However, while the Republic has focused on “Solarization”, it remains committed to both its USD and EUR curves
Diversify currencies looking for natural hedges
Windows of opportunity in USD and EUR
Provide better liquidity
Continue to grow the depth and breadth of its high quality investor base
Lower risk of funding by diversifying markets
Increase investor pool

23. Carlos Oliva Neyra. Minister of Economy and Finance
PERU Macroeconomic overview
Carlos Oliva Neyra. Minister of Economy and Finance
September 14th., 2018
“PERU: LEADING GROWTH ACROSS THE REGION”