Presentation2 Agenda Page Dominican Republic Investor Presentation Dominican Republic Investor November 2019 Presentation October 2013 [ C L I E N T N A M E ]
Our Delegation DONALD GUERRERO ORTÍZ Minister of Finance of the Dominican Republic , designated in August 2016, with extensive experience in money and capital markets. Minister Guerrero previously served as Vice-President of Corporate Banking and second Vice-President of Institutional Banking at Chase Manhattan Bank, and has held managerial positions in the auto industry in Puerto Rico, and in MID America Insurance Agency, which he owns, and has lectured in Finance, Business and Economics at various national universities. CYNTHIA I. ARIAS BÁEZ Deputy Director of the Ministry’s Public Debt Office , where she has worked over the last twelve years. Mrs. Arias’ vast experience in public credit operations spans financial restructuring, securities issuances, negotiations with bilateral and multilateral agencies, and overseeing execution of investment projects. Before becoming Deputy Director, she served as the Director of Debt Negotiations (Front Office). RICHARD MEDINA GÓMEZ Financial Advisor to the Minister , with an accumulated experience of nine years at the Ministry of Finance. Prior to his role as Financial Advisor he distinguished himself as Head of the Public Debt Office’s Debt Restructuring and General Financing division, where he participated in several important negotiations, including a debt buyback operation with Petrocaribe and several benchmark domestic and international bond issuances. VIRGINIA M. BELLO MEJÍA Public Debt Advisor to the Minister . Mrs. Bello has an accumulated experience of over fifteen years at the Ministry of Finance’s Public Debt Office, where she has contributed extensively in portfolio management operations, market and risk analyses, debt instrument issuances and investor relations coordination. Before becoming Public Debt Advisor, she served as Director of Information, Financial Analysis and Risk Management (Middle Office), at the Public Debt Office. 1
Key Investment Highlights Largest Economy in the Central America and Caribbean Region ✓ DR’s GDP in 2018 was the highest of any country in Central America and the Caribbean, accounting for 23% of total 1 regional GDP 1 ✓ Third most populous country in Central America and the Caribbean, with an estimated population of 10.4 million 2 Resilient Economy and Sustained GDP growth, supported by Public and Private Investment ✓ Average annual real GDP growth rate of 6.5% from 2014 to 2018, and real GDP growth rate of 7.0% (YoY) for 2018, the 2 highest growth rate of any economy in the Western Hemisphere during the same period. Expected to grow 5.0% by 2019. ✓ Well-diversified economy, supported by the construction, manufacturing, retail and tourism sectors Proven Monetary Policy and Healthy Financial System ✓ Consistent track record of inflation at or below the target range for each year with increasing international reserves and 3 stable FX ✓ Sizable and well-capitalized banking system Enhanced Fiscal Discipline ✓ Significant commitment to fiscal discipline has led to a steady improvement in the Public Sector Deficit (as a percentage of 4 GDP) ✓ Strong focus on institutional efficiency and public accountability Long-term plan committed to Sustainable Growth, Social Transformation and Economic Competitiveness ✓ Increase in public investment and support to micro and small enterprises has translated into decreasing poverty rate from 34.8% 5 in 2014 to approximately 23.0% in 2018 ✓ Attraction, promotion and protection of national and foreign investments, as well as ongoing efforts for infrastructure improvements (1) Regional GDP composed of Dominican Republic, Guatemala, Panama, Costa Rica, El Salvador, Honduras, Jamaica, and Nicaragua (2) Estimate as of October 30, 2019 2
Presentation2 Dominican Republic Overview
Recent Developments 1 The Dominican Republic continues to boast positive macroeconomic figures: i The fastest growing economy in the Western Hemisphere in terms of real GDP, growing 7.0% in 2018 over 2017 ii Relatively stable exchange rate, with a nominal YoY depreciation of 4.7% as of September 30, 2019 iii As of September 2019, annualized inflation rate reached 2.0%, below the Central Bank’s target rate of 4.0% Continuously improving external position, with Net International Reserves growing 63% between 2014 and June 2019, iv reaching US$7.6 bn, and a current account deficit of 1.4% of GDP by December 2018, more than financed by Foreign Direct Investment equal to 3.0% of GDP for the same year. The latest IMF Article IV Consultation with the Republic concluded that strengthened labor markets, reinvigorated credit growth, and 2 favorable external conditions have aided the country in its continuingly rapid economic growth. In addition, inflation-targeting framework and the Central Bank’s neutral policy stance has been successful at maintaining inflation rates within or below the official target range. The GAFILAT 1 concluded an on-site visit to the Republic and issued a final report in July 2018 highlighting the appropriate legal 3 framework to prevent money laundering in compliance with international standards. Also, the country was recently awarded with the rating of Largely Compliant by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. Solid international position, being elected as part of the UN Security Council and establishing diplomatic relations with China – one 4 of the Republic’s most important trade partners. Multilateral agencies have been an important source of funding for the Republic to support projects across different industries, including health, education, and electricity. During 2018 and 2019, Congress approved loans from multilateral lenders in an aggregate principal 5 amount of US$1.2 bn for the financing of various investment projects, including in the electricity distribution network, social inclusion and natural disasters.An additional US$715 mm in financing for projects is currently awaiting Congress approval. An ample record of access to the international Debt Capital Markets as evidenced by successful continued issuances of US$12.3 6 bn between 2015 and 2019, US$5.6 bn of which were placed between 2018 and 2019, including the first ever two bonds denominated in DOP. (1) The Financial Action Group of Latin America 4
Presentation2 Macroeconomic Overview
Leading Economy in Central America and the Caribbean Nominal GDP per GDP growth Ratings Primary GDP participation in CAC 1 GDP ’18 capita PPP ‘18 / forecast Pop. ’19 (Moody’s/S&P/ Country (US$ bn) (US$ ‘000) 1 ‘19 (mm) Fitch) (2018) Nicaragua Total: US$368 bn Jamaica 4% Dom. Rep. 4% Honduras Dominican 85.6 8.3 7.0% / 5.0% 10.4 Ba3 / BB- / BB- 6% Republic El Salvador 23% 7% Mexico 1,222.1 9.8 2.0% / 0.4% 125.9 A3 / BBB+ / BBB Colombia Costa Rica Baa2 / BBB- / 331.0 6.6 2.6% / 3.4% 50.4 Guatemala 16% BBB 22% Panama Guatemala 18% 78.5 4.6 3.1% / 3.4% 17.6 Ba1 / BB- / BB Region-leading GDP growth rate Costa Rica ◼ Real GDP growth 2018 60.5 12.0 2.6% / 2.0% 5.1 B1 / B+ / B+ 7.0% Panama Baa1 / BBB+ / 65.1 15.6 3.7% / 4.3% 4.2 3.7% BBB 3.1% 2.6% 2.5% 2.5% 2.0% El Salvador 1.6% 26.1 3.9 2.5% / 2.5% 6.7 B3 / B- / B- Dominican Panama Guatemala Costa El Colombia Mexico Jamaica Republic Rica Salvador Jamaica 15.5 5.4 1.6% / 1.1% 2.9 B3 / B / B+ Sources: World Bank and International Monetary Fund World Economic Outlook (October 2019). Bloomberg for Credit Ratings as of October 30, 2019 (1) Represents selected Central American and Caribbean countries, for year ended December 31, 2018 6
Robust & Diversified Economy GDP per capita PPP vs. Regional Peers 1 GDP per capita (US$ at current prices) 25,628 CAGR: 4.7% 20,616 18,346 17,566 14,936 Avg. 8,553 8,332 15,381 7,869 7,520 7,138 9,473 6,805 8,443 8,041 Panama Mexico Dominican Costa Rica Colombia Jamaica Guatemala El Salvador Republic 2014 2015 2016 2017 2018 est. 2019 Share of GDP by top sectors 2 (Jun 2018 - Jun 2019) High growth sectors (1H19 vs 1H18) 11.3% 10.6% 7.9% 10.0% 7.7% 8.5% 8.0% 7.7% 5.2% 5.4% 5.3% 4.7% 4.2% 4.1% 1.7% 1.9% Construction Finance Mining Services Hotels, Bars & Local Restaurants Manufacture Source: IMF World Economic Outlook Database as of October 2019; Central Bank (1) International dollars, year ended December 31, 2018 These sectors account for 73% of the country’s GDP (2) 7
Strong Credit Metrics vs. Comparable Sovereigns Country risk well below the LatAm region’s and approaching world average EMBI Dom Rep EMBI Global EMBI Latin America 600.0 550.0 500.0 450.0 400.0 350.0 300.0 250.0 200.0 2/1/2018 3/3/2018 2/5/2018 1/7/2018 30/8/2018 29/10/2018 28/12/2018 26/2/2019 27/4/2019 26/6/2019 25/8/2019 24/10/2019 NFPS 1 debt (% of GDP for fiscal year 2018) Fiscal deficit as a % of GDP (avg. 2014-2018) (0.2%) 94.3% (1.4%) Avg. (2.6%) (2.0%) (2.8%) (2.6%) (2.4%) 67.0% (3.0%) 53.6% 53.5% 52.1% 38.5% 37.5% Avg. 52.7% 24.7% (6.0%) Costa Rica Mexico Colombia El Salvador Dominican Panama Guatemala Jamaica Jamaica El Salvador Mexico Colombia Costa Rica Dominican Panama Guatemala Republic Republic Source: IMF World Economic Outlook Database as of October 2019; Central Bank; JP Morgan (1) Non-Financial Public Sector (General Government and public enterprises) 8
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