B Economic performance and outlook

A Macroeconomic fundamentals

2

Debt management C

3

A Macroeconomic fundamentals

Reasons to invest in Peru

4

Macroeconomic

stability

Openness

to the world

Investment-friendly

environment

International reserves

(% of GDP, 2018) Country risk

(bps, average 2018) Inflation

(%, average 2000-2018) General government

public debt

(% of GDP, 2018)

Source: International Monetary Fund (World Economic Outlook, October 2018), LatinFocus Consensus Forecasts, MEF, BCRP.

265

184

272

133 147

Bra Col Mex Chi Per

19.9 14.6 14.3 13.3

26.9

Bra Col Mex Chi Per

88.4

48.7 53.8

24.8 23.6

Bra Col Mex Chi Per

6.4 5.0 4.5

3.3 2.9

Bra Col Mex Chi Per

Macroeconomic stability: healthy balances

5

Macroeconomic stability: strong economic institutions

• Autonomous and independent central bank. Monetary policy is conducted under an inflation targeting regime with foreign exchange flexibility.

• 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.

6

A market-oriented economy that promotes openness and a legislation that gives the same treatment to local and foreign investors

Openness to the world

USD 6.7 billion

LAC

(14.1%)

USD 9.5 billion

Europe

(19.9%)

USD 0.3 billion

Africa

(0.5%)

USD 0.4 billion

Oceania

(0.9%)

USD 22.0 billion

Asia

(46.0%)

• Peru has implemented Free Trade Agreements (FTA) with 25 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 promote investment and financial integration.

• Accession process to the OECD will enhance productivity and support continuity of critical structural reforms on institutions, informality, innovation, among others.

Peru: total exports

(US$ billion and % of exports to the world, 2018)

USD 8.8 billion

North America

(18.5 %)

Source: Sunat and Mincetur. 7

8

B Economic performance and outlook

The Peruvian economy was resilient to the recent international turbulence

Stock markets indexes (Jan-18 = 100)

2018: financial indicators

Exchange rate (% change, YTD)

Sovereign rate (pbs., YTD)

Source: Bloomberg.

0.0

4.0

5.7

9.0

9.0

12.8

15.9

17.1

20.7

39.3

102.3

Mexico

Peru

China

India

Colombia

Chile

South Africa

Brazil

Russia

Turkey

Argentina

112

32

39

87

55

49

106

41

75

138

466

80

85

90

95

100

105

110

Jan-18 Mar-18 May-18 Jul-18 Oct-18 Dec-18

Peru

Emerging countries

9

7.2

2.1

2.9

1.11.4

4.3

2013 2014 2015 2016 2017 2018

5.8

2.4

3.3

4.0

2.5

4.0

2013 2014 2015 2016 2017 2018

Sources: BCRP, MEF estimations.

In this adverse context, Peru grew 4% in 2018 led by domestic demand

GDP (% real annual change)

Domestic demand (% real annual change)

10

11.1

-1.1

-9.5

-0.2-2.3

8.4

2013 2014 2015 2016 2017 2018

2018 was the year of the recovery of investment and fiscal consolidation

(*) Estimated. Source: BCRP, MEF estimations.

Private investment

(% real annual change)

Public investment (% real annual change)

High growth of private investment The highest growth rate since 2013.

Boost of public investment First positive growth rate after four

years of consecutive drops.

Overall fiscal balance

(% of GDP)

General government revenue (% of GDP)

Reduction of fiscal deficit In compliance with fiscal rules.

Recovery of fiscal revenues The highest growth rate since

2015.

0.9

-0.3

-2.0

-2.5

-3.1

-2.5

2013 2014 2015 2016 2017 2018*

22.3 22.4

20.3

18.818.3

19.5

2013 2014 2015 2016 2017 2018*

7.1

-2.2

-4.2

-5.4

0.2

4.4

2013 2014 2015 2016 2017 2018

11

Source: S&P, Moody´s, Fitch.

Latin America: credit ratings and outlook in the

last 12 months

Stable outlook Negative outlook

S&P

Peru

Chile

Colombia

Mexico

Brazil

BBB+ A3 BBB+

A+ A1 A

BBB- Baa2 BBB

BBB+ A3 BBB+

BB- Ba2 BB-

Moody’s Fitch

Stable outlook with downgrade in the last 12 months

The responsible fiscal management is reflected in our credit rating

Long-term sovereign rating in foreign currency

Investment grade

15

17

19

21

23

25

27

29

15

17

19

21

23

25

27

29

2005 2007 2009 2011 2013 2015 2017

S&P (left axis)

Fitch (left axis)

Moody's (right axis)

BB

BB+

BB -

BBB -

BBB

BBB+

A -

Ba2

Ba1

Ba3

Baa3

Baa2

Baa1

A3

2018

12

4.7

3.3

3.2

2.6

2.2

Peru*

Colombia

Chile

Brazil

Mexico

Outlook: Peru will continue to lead regional growth in the following years

Latin America: GDP1 2019-2022

(% real annual change)

1/ Consensus forecasts. (*) Forecasts published in the MMM 2019-2022 Report (the market forecast is 3.8% during the period 2019-2022).

Source: LatinFocus Consensus Forecast – February 2019, MEF estimations.

Peru: GDP (% real annual change)

5.8

2.4

3.3

4.0

2.5

4.0

4.7

2013 2014 2015 2016 2017 2018 2019-22*

13

1,355 June 2018

Total 13,956

Toromocho extension

249 June 2018 San Martín General Port

Terminal

5,300 July 2018

1,600 September 2018

Quellaveco

Mina Justa

229 October 2018

1,500 December 2018 Modernization of the Jorge

Chavez Airport

Salaverry Port Terminal1

365 December 2018 Lote 95

Project Total investment

(US$ million)

Announcement

date

358 December 2018 6 Regional wide bands³

Chancay Port Terminal4 3,000 January 2019

Investment projects announced since June 2018 that will be in execution in 2019

Private investment will support growth for the following years

1/ Contract signing. 2/ Government announces land delivery to LAP in October 23, 2018. 3/ Wide band projects were awarded on December 2018. 4/ In January 2019, CSP acquired a 60% stake in the project, which was under construction

with an initial investment of US $ 372 million. With the entry of CSP, the project will be resized to mobilize container loading. Note: Michiquillay was awarded in February 2018 and will start the construction phase in 2022. 5/ It not includes 7

mining projects for US$ 10 billion that start construction in 2018. Source: MEF, ProInversión, APN. 14

15

Important portfolio of projects

Private investment will support growth for the following years

PPP projects for more than 58 US$ 10 billion will be awarded between 2019-2021.

mining projects for approx. 41 US$ 49 billion will start the construction phase in

the next years.

5

1/ Contract signing. 2/ Government announces land delivery to LAP in October 23, 2018. 3/ Wide band projects were awarded on December 2018. 4/ In January 2019, CSP acquired a 60% stake in the project, which was under construction

with an initial investment of US $ 372 million. With the entry of CSP, the project will be resized to mobilize container loading. Note: Michiquillay was awarded in February 2018 and will start the construction phase in 2022. 5/ It not includes 7

mining projects for US$ 10 billion that start construction in 2018. Source: MEF, ProInversión, APN.

Source: MEF.

Environmental sustainability OP9 OP8 OP7 Innovation

Business environment

OP6 OP5

Education and health OP3

Capital stock Human capital

Efficiency and institutions

OP1 Infrastructure Financing

Trade Institutions

Labor market OP2 OP4

A Competitiveness and Productivity Policy will underpin growth

16

Executive bureaus are important tools to promote product diversification

Source: MEF. 17

Forestry

Transportation

Turism

Aquaculture

Logistic and

infraestructure

Public

Purchases

Mining &

energy

Innovation

Public

Private

Modernization of administrative systems for improvement of expenditure

Source: MEF.

Effective

administration that

improves supply of

public goods and

services

Actions: integration and

strengthening of public systems

Public budget

Investment programming

Human resources fiscal management

Supplying systems

Public treasure

Public indebtedness

Public accounting Improve

spending and

accountability

Assessment Results

Adequate provision of public goods and services increases the population’s welfare.

18

- 2.7

- 1.9

- 1.0 - 1.0

-4

-3

-2

-1

0

1

2

3

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

56.4

43.2

37.5

26.0

15

20

25

30

35

40

45

50

55

60

2006 2008 2010 2012 2014 2016 2018 2020 2022

Emerging Countries

Pacific alliance

Similar credit rating

Peru

Legal limit: 30% of GDP

1/ General Government Coverage. The SPNF is considered in the case of Peru.

Source: MEF, BCRP, Fiscal Monitor (october 2018).

Public debt1

(% of GDP)

• In 2018, the fiscal deficit reached 2.5% of GDP, below the fiscal rule (3.5% of GDP), mainly due to fiscal revenues.

Fiscal discipline will be a key factor to guarantee sustained growth

Fiscal deficit (% of GDP)

19

Modernization of the tax system is key to achieve this objective

Source: MEF.

Enhance digital

Transformation

Adapt to

international best

practices

Enable the

investment climate

The transparency of the

system reduces tax

evasion and contributes to

fighting against corruption

and money laundering.

Reduces costs and

improves oversight.

Greater predictability to the

tax system.

Increase in fiscal revenues for better public services

2 3 1

20

The goals are to promote economic growth and increase citizens’ welfare

21

Achieve growth rates of 5% in the coming years

Underpin potential growth

Reduce poverty

Improve country’s general welfare

22

Debt management C

23

The sources of financing come from asset management and internal and external liabilities

Lines of defense to finance Economic Growth

Assets

USD 5,770 million

Fund size as of December 31, 2018

National Emergency

International Crisis

Savings

Mechanism

Fiscal Stabilization Fund

Other Non Financial Public Sector Financial Assets

Secondary Liquid Reserve

Liabilities

Debt Capital Markets

Multilateral and Bilateral Loans

Local Market

Soberanos Bonds

International Market

Global Bonds

Stock as of December 31, 2018

USD 9,089 mn

EUR 2100 mn

CAF BID BIRF Otros

Contingency loans

As of December 31, 2018

USD 4,000 million

Sources

of

Funds

24

“solarize” Debt and develop local debt capital markets

64 57

46 33

5 30 49

61

31

14 5 6

2004 2009 2014 2018*

Dollars Soles Other

Composition of Public Debt by Currency

(% of total debt)

Liability Management (LM) 2014-2018

(Millions of dollars)

* December 2018

2.115

500

1.303

545

1.250 1.232 1.120

3.042 3.084 3.071

BS 24 BG 50 BS 31 BG 50 BG 27 BG 26 BG 30 BS 28 BS 32 BS 29E

LM 2014 LM 2015

LM 2016 LM 2017 LM 2018

• No USD paper USD EUR soles

25

Peru has significantly increased its Soberanos debt stock by focusing on international format debt issuances (GDNs and Euroclear)

Soberanos

USD Global Bonds

Debt Capital Markets

linkers

Treasury bills

EUR Global Bonds

Local Market

International Market

Development of the debt market through sovereign

bond issues in soles

Taking advantage of Windows of opportunity to

maintain liquidity/efficient yield curves

Local

GDN’s

Since 2005, Peru has successfully increased its

Soberanos (PEN) debt stock by 12.6x compared to a

growth of 1.8x for its Global Bonds (USD and EUR) debt

stock…

Euroclear

6.513 8.571 9.458 11.440 11.548

11.484 11.484 8.092

26.008 32.961

44.849

86.399

97.943 102.276

dec-05 dec-10 dec-13 dec-15 dec-17 Dec-18 Feb-19

Global Soberanos

12.6x

1.8x

*

* February 18-2019

26

The solarization strategy has been successful in improving market Liquidity in primary and secondary markets

-

3.500

7.000

10.500

14.000

Ja

n

Mar

May

Ju

l

Sep

No

v

Ja

n

Mar

May

Ju

l

Sep

No

v

Ja

n

Mar

May

Ju

l

Sep

No

v

Ja

n

Mar

May

Ju

l

Sep

No

vD

ic

2015 2016 2017 2018

CNM OTC

* Jan, 2019

Secondary Market Activity

(PEN million)

+42%

+56%

Monthly average

4,853

Monthly average

6,906

Monthly average 10,760

Monthly average 13,981

+30%

Primary Market Activity

(PEN million)

0

2.000

4.000

6.000

8.000

10.000

12.000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019*

27

Diversification of non- resident investor base for local bonds

30%

33%

36%

39%

42%

45%

48%

51%

55%

45

52%

47%

Issuances Benchmark

7.840% Aug 2020s

S/ 4,196 million

Date.; Nov 10

5.700% Aug 2024s

S/ 7,128 million

Date; Nov 14

6.350% Aug 2028s

S/ 10,251 million

Date; Sep 16

[VALO…

6.94% Feb 2029E

S/ 10,350 million

Date; Dec 18

[VALO…

6.150% Aug 2032s

S/ 10,000 million

Date; Jul 17

6.950% Aug 2031s

S/ 4,392 million

Date; Mar 15

Issuance of S/ 10.3 billion

6.35% Sovereign Bonds 2028

(One of the largest local

currency issues in emerging

markets, the same which

reduced liabilities in USD)

Issuance S/ 10 billion 6.15%

Sovereign Bonds 2032

(Issuance that had demand

exceeding 30bn and was settled

through Euroclear)

Issuance S/ 10.350 billion

6.94% Sovereign Bonds 2032

(Issuance that had demand

exceeding 15bn and was settled

through Euroclear)

Sovereign Bonds: Non-resident investors (% of total investors)

46.70%

28

However, while the Republic has focused on “Solarization”, it remains committed to both its USD and EUR curves

Windows of opportunity in USD and EUR

Diversify currencies looking for natural hedges

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