Republic of Open | Competitive | Vibrant

1 April 2020 | Strictly Private & Confidential Disclaimer

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2 Summary Terms of the Offering

Issuer Republic of Paraguay (“Paraguay”)

Expected Ratings Ba1 / BB / BB+ (Moody’s/S&P/Fitch)

Format 144A / RegS

Currency United States Dollar (“USD”)

Security New Notes due April 2031

Size US$ Benchmark

Average Life 10 Years

Amortization Three nominally equal payments in last three years

Optional Redemption Make-Whole Call | 3-Month Par Call

Listing Luxembourg Stock Exchange / Euro MTF

(a) General Budgetary Purposes, Use of Proceeds (b) COVID-19 Response

Denominations US$200,000 x US$1,000

Governing Law State of New York

Joint Bookrunners Citibank (B&D) / Goldman Sachs / Itau BBA / Santander

3 Today’s Speaker

Paraguay Ministry of Finance & Central of Paraguay

Benigno Maria Lopez Benitez - Minister of Finance Education . B.A. Law, School of Law of the Catholic University “Nuestra Señora de la Asunción”, Asunción, Paraguay . L.L.M., Georgetown University, Washington D.C., US Most Recent Professional Experience . 2018 – Present: Minister of Finance, Republic of Paraguay . 2014 – 2018: President, Instituto de Prevision Social (IPS) . 2013 - 2014: Executive Legal Director, Itaipu Binational Dam . 2012 – 2013: Senior Advisor to the Executive Director, International Monetary Fund (IMF) . 2007 – 2012: Member of the Board of Directors, of Paraguay

Jose Cantero Sienra – President of the Central Bank Education . B.S. Economics and Political Science, University of Kansas, Kansas, US . Masters in Economic Policy, University of Illinois, Illinois, US . Masters in International Finance, University of Illinois, Illinois, US Most Recent Professional Experience . 2018 – Present: President, Central Bank of Paraguay . 2017 – 2018: Member of the Board of Directors, Central Bank of Paraguay . 2014 - 2017: CEO, Interfisa Banco . 2008 – 2014: Editor in Chief, Foco Economia y Negocios Magazine

4 Key facts: Republic of Paraguay

. Moody's: Ba1 / Stable Sovereign Credit Rating . S&P: BB /Stable . Fitch: BB+ / Stable Geography . Capital City: Asunción . 7.15 million (2019) Population . Over half of the population lives in urban areas in the eastern portion of the country Paraguay . Paraguayan Guaraní,₲ Currency . Exchange Rate G.6,240 per U.S.dollar (YE 2019) . Nominal GDP: 39 USD Bn (2019) GDP . Real GDP Growth: 3.2%(2015-2019 Avg.) . GDP per capita: 5,404 USD (2019)

President . Mario Abdo Benítez (ColoradoParty) . Start of five-year term on August 15,2018

Paraguay’s Credit Ratings, on its Path to Investment Grade Growth Profile & Key UpgradeDrivers

5,0% 4,3% Real GDP Growth (%) BBB-/Baa3 Investment Grade 3,1% 3,4%

BB+/Ba1 BB/Ba2 0,2%

BB-/Ba3 2015 2016 2017 2018 2019 B+/B1 Resilience to . Credit metrics continued to improve despite B/B2 economic problems in its key neighbor External Shocks B-/B3 S&P countries, Brazil and Argentina . Remarkable growth performance on average CCC/Caa1 Moody's Growth combined with increasing pace of economic Fitch Performance

diversification

8 6 7 8 9 0 1 2 3 4 5 6 7 9

1 0 0 0 0 1 1 1 1 1 1 1 1 1

------

c c c c c c c c c c c c c c

e e e e e e e e e e e e e

e . Track record of fiscal discipline, with

D D D D D D D D D D D D D D Macroeconomic Discipline institutionalized fiscal prudence . Start of five-year term on August 15,2018

Source: Ministry of Finance of Paraguay, Central Bank of Paraguay, Standard and Poor's, Moody's December 2019, Fitch December 2019, Fitch Paraguay's full rating report , December 2019 5 Credit Highlights

1 Disciplined government committed to low government debt and structural reforms

2 Prudent macroeconomic policy with historical track record of above average and resilient growth

3 Robust export sector: global leader in grain, livestock and electricity exports

4 Government institutions focused on improving effectiveness, with a strong forward looking stance

Source: Ministry of Finance of Paraguay, Central Bank of Paraguay 6 Key Credit Highlights

7 Economy Sustained by Historically Strong Macro Pillars

Price Stability Fiscal Balance Inflation, annual year-end growth rate (%) Fiscal Surplus / (Deficit) as a % of GDP

Solid Financial System Balanced External Account Non Performing Loans (%) Current Account Balance as % of GDP

Source: Ministry of Finance of Paraguay, Central Bank of Paraguay, IMF. 8 Flexible Budget to Stabilize Economy and Increase Resiliency

With Investment1 That Grows At an Annual Rate of 49.9% 100% of Fiscal Deficit Explained by Government Investment Investment distribution USD million as of December 2019 Central Government Finances (As % of GDP)

2 Net Operating Balance US$ 51.4 US$ 35.0 Health Agriculture, Global Fiscal Balance Industry and 1,3 Commerce 1,1 0,7 0,7 US$ 70.1 0,1 US Others US$ 869.3 $1,135.4 US$ 10.5 Public Works Central Employment, Government Justice and Social Security (1,3) (1,1) (1,1) Investment (1,3) US$ 11.3 Dwelling (2.9) US$ 42.7 US$ 45.1 Security 2015 2016 2017 2018 2019 Education

Source: Central Bank of Paraguay (BCP), Statistical Annex to Economic Report … While We Continue to Work on Diversifying Our Economy and Enhance Efficiencies in Our Primary Sector % of Total Real GDP by Sector as of December 20193

VAT 7.6% Agriculture 7.8% Livestock, 2.1% Government 9.3% Forestry, Fishing, Mining 0.9% Primary 10.8% Household Services 4.7% Manufacturing 19.1% Restaurants and Hotels 2.7% Business Services 2.4% Secondary 32.6% Housing 6.4% Construction 6.0%

Finance5.6% Electricity, Water 7.5% Communications 3.6% Tertiary 49.1% Transportation 3.8% Commerce10.6%

Source: Ministry of Finance of Paraguay, Central Bank of Paraguay . 1Investment refers to Net Acquisition of Non-financial Assets. 2$1.6bn approved by Congress to Mitigate COVID-19 not contemplated in this number 3Preliminary Data 9 Resulting in a Healthy Trade Balance in Recent Years

Positive External Balance, Lead by Export Growth A Positive Trade Balance in the 2015-2019 Period

3,6% 3,1% 2,2 1,9 (0,4)% (0,2)% (1,2)%

$13,40 $13,73 $11,10 $11,98 $12,70 0,8 0,8 0,4

2015 2016 2017 2018 2019

$(10,31) $(9,78) $(11,52) $(12,92) $(12,25) Trade Balance (USD bn) 2015 2016 2017 2018 2019 Imports (USD bn) Exports (USD bn) Current Account as % of GDP

Underpinned by its Competitive Profile in The Region

Item  Lowest indirect tax rate in theregion Indirect TaxRate 10% 17% 21% 19%

Corporate TaxRate 10% 34% 35% 25%  Lowest corporate tax rate in the region

Trade Weighted 7.0% 10.0% 14.8% 5.8% Average Duty(%)  Second lowest trade weighted average duty Social Security 25.5% 31.0% 40.0% 32.0% Contribution(*)

EnergyCost  Lowest energy costs in theregion 6.6 16.8 10.8 10.2 (c$/kWh)

Source: Ministry of Finance, including data from Central Bank of Paraguay (*) Sum of the Total Contribution to Social Security of the employer and the employee. 10 Stands Out Among Investment Grade Peers

High Growth Rate Driven by Exports and Private Consumption Paraguay’s Fiscal Discipline in Line with Peers Real GDP Growth %, 2015-2019 Average General Government Net Lending/Borrowing as % of GDP, 2015-2019 Average

4.6 % 4.4 % 2.7 %

3.2 %

2.4 % 2.4 %

(1.5)% (1.9)% (2.6)% (3.0)%

Portugal Colombia Paraguay Cyprus Panama Cyprus Paraguay Portugal Panama Colombia Baa3/BBB/BBB Baa2/BBB-/BBB- Ba1/BB/BB+ Ba2/BBB-/BBB- Baa1/BBB+/BBB- Ba2/BBB-/BBB- Ba1/BB/BB+ Baa3/BBB/BBB Baa1/BBB+/BBB- Baa2/BBB-/BBB-

Source: International Monetary Fund, World Economic Outlook Database, April 2020 Source: International Monetary Fund, World Economic Outlook Database, April 2020

Commitment To Low Government Debt, Apparent in Peer Global Leader in its Exported Goods, Which Ensures an External Comparisons Buffer Central Government Debt as % of GDP, year-end 2019 Current Account Balance/Deficit as % of GDP, year-end 2019

(0.1)% 115.5 % (1.2)% 94.5 %

(4.3)% 43.6 % (5.2)% 41.3 % 22.9 % (6.7)%

Paraguay Panama Colombia Cyprus Portugal Ba1/BB/BB+ Baa1/BBB+/BBB- Baa2/BBB-/BBB- Ba2/BBB-/BBB- Baa3/BBB/BBB Portugal Paraguay Colombia Panama Cyprus BBBu/Baa3/BBB BB/Ba1/BB+ BBB/Baa2/BBB- BBB+/Baa1/BBB BBB-/Ba2/BBB-

Source: Capital IQ, Bloomberg, Central Bank of Cyprus Source: International Monetary Fund, World Economic Outlook Database, April 2020

Source: Ministry of Finance of Paraguay, Central Bank of Paraguay, IMF, Moody’s. 11 A Debt Profile That is Conservative and Supportive of Growth

Total Debt Increase Aligned with Paraguay's Economic Growth, Conservative Debt Service Profile Over the Next 5 Years Yet Still the Lowest in its Category… USD mm Government Debt as % of GDP (%)1

Paraguay Debt Outstanding as of Feb-20: $7,923.9 Latam Average Ba Group Average Amortizations in 2025 and After: $5,975.1 57,4% 53,4% 48,2% 54,1% 51,5% Debt Amortizations 44,2% 49,3% 50,1% 45,9% 49,7%

22,9% 19.7% 17,3% 18,2% 15,1% $989,9

$224,6 $234,8 $247,2 $231,0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

A Diversified Domestic and External Funding Profile Total Government Debt in USD bn, as of February 20201 Bonds IDB 55.0% 22.9% External Public Debt Domestic Public Debt Debt as % of GDP 23,8% 22,9%

19,7% Turnkey Law 18,2% 17,3% (5074/13) 1.2% 15,1% 9,5 8,8 Private Official IBRD 8,0 1,6 7,2 1,6 Creditors Creditors 8.1% 6,3 1,6 55.0% 43.7% 5,5 1,6 1,5 1,5 CAF 7,2 7,9 6.2% 5,6 6,4 4,0 4,8 Other Multilateral 3.7% 2015 2016 2017 2018 2019 feb.-20 Bilateral 4,0%

Source: Moody’s, Ministry of Finance of Paraguay, Central Bank of Paraguay 1 2 12 Moody’s $1.6bn approved by Congress to Mitigate COVID-19 not contemplated Steadfast implementation of key policy reforms and priorities

Paraguay is committed to enacting key policy reforms and has already promulgated laws in support of the following strategic priorities

Laws Referred to the National Congress

Tax Reform . Reformed aimed to simplify and modernize the tax code. Law 6380/19

. Creation of Criminal Courts of guarantees, of Criminal Enforcement, Courts of Sentence, Criminal Appeal; all specialized in Money Laundering, Drug Trafficking, Anti-kidnapping, Financing of Terrorism, Corruption and Organized Crime. Law 6379/19 Bills about money . Creation of the procedure for the Reception of Dissemination and Exclusion of Individuals and Legal Entities Issued by the laundering, terrorist Security Council of the United Nations Organization and modifies Law 4503/11 on the immobilization of Funds or Financial financing and Assets. Law 6419/19 organized crime . Modification of Law 5895/17 on the rules of transparency in the regime of Companies Incorporated by Shares. Law 6399/19 within the . Modification of Law 5876/17 on the Administration of Seized and Commissioned Goods. Law 6396/19 framework of the . Modification of Law 1015/97 that prevents and suppresses illicit acts and its amendment Law 3783/09. Law 6497/19 recommendations made by the . Creation of the List of Final Beneficiaries of the Republic of Paraguay. Law 6446/19 International . Creation and typing of the Punishable Facts of Transnational Bribery. Enacted: Law 6430/19 Financial Action . Modification of Law 4024/10 on the Fight against Terrorism and incorporating the punishable facts of recruitment and Task Force for Latin indoctrination, terrorist fighter abroad and apology of terrorism. Law 6408/19 America (FATF) . Creation of the Special Procedure for the application of the Comiso, the Special Comiso, the Autonomous Comiso and the Deprivation of Benefits and Earnings. Law 6431/19 . Modification of the provisions of Law 1160/97 of the Criminal Code and Law 3440/08, and punishable facts of market manipulation and others are created and typified. Law 6452/19

Mortgage Guarantee Law to Simplify Company Insolvency Bill New Budget Law Law Formation

. Establishes a faster and Employment, . Aimed at improving the . Introduced budget-by-results, which . Seeks to facilitate low cost framework for business climate in incorporates additional accountability Competitiveness business closure and other access to funding Paraguay; by facilitating to public finances and cuts for entrepreneurs . Aims at facilitating the and reducing time and discretionary spending for investments recoveryof assets and costs to opena business . 2020 budget was already prepared and credit cash after a business . Enacted: Law 6480/2019 under budget-by-result closure methodology

Source: Ministry of Finance of Paraguay 13 COVID-19 Response

14 Paraguay has Reacted Rapidly to Mitigate Impact of COVID-19 Outbreak

Key Preventive Measures Against COVID-19 COVID-19 Cumulative Cases Average Daily New Cases 719.1 Case 45 Zero . 7th March – Paraguay confirms its first case of COVID-19 40 Brazil 35 . 10th March – Ministry of Education issues Resolution 308/20 closing all primary and secondary classes for 15 days, Ministry of Health issued 30 339.7 Resolution S.G. 90 suspending all large public gatherings 25 20 214.4 . 11th March – The Supreme Court of Justice (the “CSJ”) issued Judicial Peru 15 Resolution 1366/20 largely suspending judicial activity through March 26, 88.2 Chile 60.0 10

2020 Ecuador 4.7 Thousand Thousand of Cases . 13th March – The Ministry of Health issued Resolution S.G. 96/20 fixing the 5 Argentina Paraguay

pricing of hand sanitizers, face masks and latex gloves 0

Peru Chile

1 6 11 16 21 26 31 36 41 46 51 Brazil

th Days Ecuador Paraguay

. 16 March – Presidential Decree 3456/20 declared a state of sanitary Argentina emergency to control compliance with the sanitary measures established in Source: Bloomberg Source: Bloomberg response to COVID-19 Incidence Rate in the Region1 55.0 . 16th March – All borders close completely for non-Paraguayan citizens and 47.4 Government declares State of Sanitary Emergency in the Country (Presidential Decree 3458/20) . 17th March – Ministry of Health issued Resolution S.G. 99/20 , ordering 18.4 mandatory curfew from 20:00 to 04:00 (initially for 7 days)

th 6.5 7.4 . 19 March – Ministry of Health takes control of the National Sanitary 2.9 System and hospital beds nationwide . 20th March – Presidential Decree 3478/20 extended the Partial Curfew for Paraguay Argentina Colombia Brazil Peru Chile the general population to a 24-hour curfew. Source: COVID-19 Dashboard by the CSSE at Johns Hopkins University 2 . 23st March – DINAC issued Resolution 313/20 suspending all flights to Economic Packages in the Region Paraguay from March 24, 2020 through April 12, 2020, with medical and (% of GDP) 12.2 % search and rescue exemptions . 9th April – Presidential Decree 3526/20 authorized the Ministry of Health to 7.3 % establish shelters for the supervised isolation of individuals who have tested positive for COVID-19 4.9 % 3.0 % 3.4 % th . 10 April – National Government allows vehicular movement based on 1.3 % license plates numbers

th . 17 April –“Stay at home” order is extended until April 26th Colombia Argentina Brazil Paraguay Chile Peru

Today Source: Goldman Sachs Research Report

Sources: IMF, Health Ministry of Paraguay, Paraguay’s National Information Agency, GS Research and COVID-19 Dashboard by the CSSE at Johns Hopkins University Note: Update on April 19, 2020. 1 Cases per 100,000 persons. 2 Considers discretionary fiscal easing and loan guarantees packages. 15 Key Measures to Fight COVID-19

Strengthening of Public • Acquisition of medical equipment for US$514 mm Health System • Reference pricing for certain sanitary supplies

 Since the nationwide State of Emergency was declared on Reduction in Public • Reduction in wages for public employees th March 16 , Paraguay has Spending • Suspension of subsidies adopted a number of measures in order to mitigate and reduce the effects of the pandemic Social Distancing • Suspension of mass attendance events, work activities and circulation  The measures are aimed at Measures • Nationwide curfew established strengthening the healthcare system, protecting employment and avoiding disruptions to the • Reduction to 0% import taxes on sanitary goods supply chain Tax Relief and on capital imports • VAT reduction for certain goods  Law 6524/2020 allowed the Executive branch to incur in up to $1.6bn of additional debt in Employment and Social • Funding of different social programs to help families order to fight the pandemic, Assistance and people who are left with no income which will come from international lenders and multilateral agencies, as well as debt issued in the international • Benchmark rate reductions Financial Support • Increase in funding lines available for SMEs capital markets

• Total closure of the borders Border Control • Restrictions on domestic circulation

16 Resilient Market Conditions Despite Volatility

Sovereign Spread Performance Currency Performance Indexed 30yr USD Spread Performance for 2020 YTD Currency Appreciation / (Depreciation) vs. LatAm Peers 2020 YTD

Paraguay Peru 350 Brazil Chile Colombia (0.05)% PYG

300

(3.27)% PEN

250 253

228 (12.45)% CLP 216 200 214 188 (17.90)% COP 166 150

(21.61)% MXN

100

(23.99)% BRL

50 Jan-20 Feb-20 Mar-20 Apr-20

Source: Bloomberg as of April 20, 2020 Source: Bloomberg as of April 20, 2020

17 Appendix

18 Key Measures Taken to Fight COVID-19

Reduction in Public Spending Employment and Social Assistance

• During the months of April, May and June, there will be a 10% reduction to • Suspension of work activities with strict exceptions and work from home wages, expenses and fees from government entities for those between 5-10 policies to the extent possible minimum wages, and 20% reduction for those above 10 minimum wages • Measures to guarantee the payment of salaries to workers during • Additionally, the Government has implemented a number of spending quarantine, including paid annual leave, and advance payment of salaries, reduction measures, such as: and bonuses • Cancellation of public contract awarding for catering services • Collective suspension of employment contracts, but without stopping the • Cancellation of transportation buying, except for those used for payment of wages healthcare, national security and those required for the national • Benefits for informal workers who do not have access to public insurance. emergency • Advanced payment of food subsidy for elderly citizens • Suspension of the implementation of voluntary retirement plans for • Additional transfer to beneficiaries of Tekopora program, which will benefit public employees 167k families • Suspension of family subsidies for marriage, holiday assistance and • Ñangareko program for alimentary safety: G. 500k grant for purchase of food food across all government entities and hygene products to ~330k families who are being affected by COVID-19 • Temporary suspension of the wage increase contained in the 2020 • Pytyvo program: grant of a subsidy equal to 25% of minimum wage to budget independent workers, o dependant on SMEs

Commerce Financial Support

• Suspension of mass attendance events. Closure of cinemas, theatres, clubs, bars, and sports events. Suspension of educational activities (in person) • Reduction of benchmark rate to 2.25% • Suspension of work activities, social meetings, and circulation (except for the • Regulatory amendment to make US$957mm available to financial purchase of food or medicine) institutions to fund new lending or restructuring • Absolute circulation prohibition from 20:00 to 04:00 which was later replaced • Financial institutions have opened special lines of credit for certain sectors; by a 24 hours prohibition (except for health professionals) including BNF (working capital lines), CAH (refinancing line) and AFD • Instructions for the prevention of Covid19 addressed to commercial premises (commercial loans) authorized to function • BCP and Agencia Financiera de Desarrollo launched measures to provide • Promotion of online purchases in no-interest installments by the Ministry of liquidity to SMEs in sectors affected by COVID-19 Commerce in alliance with the private sector • Lowering the price of gasoline in all state-run gas stations (Petropar)

19 Key Measures Taken to Fight COVID-19

Public Health Banking and Finance

• Reduction of interest rates set by and reduction of the • Reference pricing for supplies such as mouthpieces or alcohol gels mandatory legal reserve of banking entities to promote liquidity in the market • Acquisition of medical equipment worth and urchase of biological protection • Refinancing mechanisms for all economic sectors, until the end of 2020 supplies for an approximately USD 514 million. Recruitment of 2,700 medical without any effect on the bank rating of the borrowers professionals temporarily during the pandemic. • US$15 million credit facility granted to Banco Nacional de Fomento • Free telephone line (154) for attention and consultations concerning exclusively to provide working capital for small and medium-sized enterprises Coronavirus. Creation of a web page for self-reporting by citizens presenting • Credito Agricola de Habilitation (CAH) relaxed the loan payments for the symptoms of Coronavirus agricultural sectors • Authorization of private laboratories for the analysis of Coronavirus • Agencia Financiera de Desarrollo (AFD) made available approximately USD • Designation of Ingavi hospital to treat Covid cases19 exclusively. Setting up 63 million for refinancing debts of the productive, commercial, and service of containers equipped to treat cases in cities with scarce resources. sectors. The AFD is authorized to refinance loans to , financial Incorporation of 300 beds with ventilators institutions, and cooperatives. Two funds under the custody of the AFD are • Construction of provisional hospitals in Itagua and Ineram to exclusively treat established to provide loans to small and medium-sized enterprises cases of Coronavirus • The Ministry of Finance reallocates items such as additional hours, • Transfer of patients who tested positive for Coronavirus and cannot be consultancy, travel, and other expenses in the amount of USD 50 million to isolated in their homes to shelters the Ministry of Health • Reduction of public salaries, allocating these funds to the health system • USD 1.6 billion additional indebtedness to guarantee resources to the health system and promote economic recovery

Border and Domestic Control Tax Relief

• Interest-free fractioning for payment of taxes. Waiver of fines for delayed tax payments until June 2020 • Total closure of the borders. Controls are conducted by air, land, and river. • Deferral for the payment of Corporate Income Tax until July 2020 The entrance to the country is reserved only in humanitarian or health cases • The validity of the tax compliance certificate is extended to 90 days. Waiver • Domestic circulation restriction. The National Police carries out strict controls of the tax compliance certificate to access credits under USD 23,000 to prevent the internal displacement of people. Mandatory use of a mask for • Reduction of VAT from 10% to 5% for all healthcare and sanitary products. public transit Customs and tax benefits for medical and healthcare products • Arrangements for the return to the country of nationals located abroad or in • Reduction to 0% import taxes on sanitary goods such as masks, surgical border areas gowns, safety glasses, alcohol gel and for certain components (Decrees • Detentions and sanctions apply to persons who do not comply with the 3529/20 and 3471/20) circulation restrictions • Reduction of VAT for such products to 5% • Reduction to 0% on capital goods import tax (Decree 3528/20)

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