The German-Speaking Community in Belgium Structure of the Belgian Federal State

INVESTOR PRESENTATION 2021 GERMAN-SPEAKING COMMUNITY OF BELGIUM

OSTBELGIEN | JUNE 2021 CONTENT

1. INSTITUTIONAL CONTEXT 2. PRESENTATION & ORGANISATION 3. BUDGET & FINANCE 4. DEBT MANAGEMENT AND FINANCING STRATEGY 5. KEY INVESTMENT HIGHLIGHTS 6. USE OF PROCEEDS 7. KEY TERMS & CONDITIONS 1 INSTITUTIONAL CONTEXT THE GERMAN-SPEAKING COMMUNITY IN BELGIUM STRUCTURE OF THE BELGIAN FEDERAL STATE

Communities Regions

VLAANDEREN VLAAMSE GEMEENSCHAP BRUSSELS

COMMUNAUTE WALLONIE FRANCAISE

DEUTSCH- SPRACHIGE GEMEINSCHAFT

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM28.05.2021 PAGE 4 COMPETENCIES OF THE COMMUNITIES

. Culture . Individual-related matters . Education

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM28.05.2021 PAGE 5 COMPETENCIES OF THE REGIONS

Town and country Economic policy planning

Environment Energy

Rural development Local Authorities and nature protection

Housebuilding Employment

Public works Agriculture S.295 IZ KAISERBARACKE 2012_Edition E. Kirsch Studio and transport ADR , A. Drèze

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM28.05.2021 PAGE 6 THE GERMAN-SPEAKING COMMUNITY AS SELF-GOVERNED PART OF BELGIUM

KELMIS LONTZEN RAEREN NL

EUPEN

BÜTGENBACH DE AMEL BÜLLINGEN

ST. VITH

LUX

F BURG-REULAND

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM28.05.2021 PAGE 7 DEMOGRAPHICS

Population POPULATION DEVELOPMENT SINCE 1990

Source: Statbel as at: 1.1.2018

Eupen canton Eupen canton: 46,989 (60.9%) 20% (+18%) 18% 16% German community 14% (+15%) 12% St.Vith canton: 30,196 (39.1%) 10% 8% St.Vith canton: 6% (+11%) 4% 2% 0% German-speaking community: 77.185 1990 1994 1998 2002 2006 2010 2014 2018

Source: Statbel as at: 1.1.2018

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM28.05.2021 PAGE 8 2

PRESENTATION & ORGANISATION SOVEREIGN BORDER EXPERIENCE RESIDING, LIVING, WORKING AND DRIVING THE ECONOMIC WITHOUT BORDERS IN THE HEART OF EUROPE

± 60

FLANDERS 486 (ONSS 2017) 315

BRUSSELS 268 GERMANY 4,435 (ONSS 2017) 99 (BA 2018)

WALLONIA 5,527 597 (ONSS 2017) (ONSS 2017) 4,080 2,938 in the Verviers district: 561 (INAMI 2017)

LUXEMBOURG MOBILE WORKFORCES (IGSS 2018) IN BORDER REGIONS EDUCATIONAL REGION: CAPITAL OF THE FUTURE

• Educational equality • High level of training and education • Wide-ranging participation possibilities for young people • Strengthening media skills

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 12 GOOD EDUCATION AND FURTHER TRAINING

• Qualified multilingual workforces • Dual education • Autonomous college in the German- speaking community • Short distances

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 13 ECONOMIC REGION: INNOVATION & COOPERATION

• Profiling as a trade and services region • Promotion of SMEs through strong networks • Sustainability • Regional cycles • Creative industry

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 14 CLOSE LINKS WITH RESEARCH AND DEVELOPMENT

• RWTH Campus • FH Aachen • Université de Liège • Jülich research centre • Maastricht University

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 15 POPULATION BY COUNTRY OF ORIGIN

FOREIGN POPULATION BY COUNTRY OF ORIGIN

Source Statbel. As at: 1.1.2018

Spain 1,29% FEDERAL REPUBLIC OF Rumania Iraq 1,71% 0,68% Bosnia-Herzegovina Other countries GERMANY 1,39% 11,81%

The Netherlands 4,05% Luxembourg 1,36% 69.65% Italy 1,05% Poland 1,69% Russia Federal Republic Kosovo 1,55% 0,61% 69,65% France 1,25%

Turkey 1,36%

Morocco 0,55%

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 16 EMPLOYEES BY SIZE OF BUSINESS

Employers and employees Employees by size of business by size of business 80% (Private sector) 80%

60% German community Wallonia 40% Flanders 48% 20% Brussels Belgium 0% < 100 100-199 > 200 23% 18% Only Ger. com. Employees Employers 16% 13% < 10 5,103 1,784 1% 0% 10-99 10,946 409 100-199 3,591 26 < 10 10-99 100-199 > 200 > 200 3,045 7 Employees Main office Total 22,685 2,226

Source: NSSO, as at: 30.6.2017

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 17 EMPLOYEES BY SECTOR

RELATIVE SIGNIFICANCE OF SECTORS BY REGION

Manufacturing industries 22% 13% Trade and repairs 13% Property and housing 11% Public administration Ger. com. Health and social affairs 11% Wallonia Construction industry 6% 6% Education and training Flanders Freelance and technical services 4% Belgium Transport and storage 3% Finance and insurance 2% 0% 5% 10% 15% 20% 25%

Source: NSSO, as at: 30.6.2017

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 18 RESPONSIBILITIES CULTURAL MATTERS

• Protection and promotion of language • Art, culture, cultural heritage and museums • Media: Radio and television, libraries, media centres • Youth policy • Adult education • Sport • Leisure activities and cultural events • Art training • Professional training and further education

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 20 PERSONAL MATTERS

• Families and family allowances • Health • Social care • Admission and integration of immigrants • Disability policies • Senior citizens’ policies • Youth welfare • Film monitoring • Reintegration of prisoners • Initial legal support • Public service halls and electronic supervision

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 21 TEACHING AND EDUCATION

• Nursery schools • Primary and secondary schools • Special schools • Kaleido East Belgium Centre for the healthy development of children and young people

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 22 FOREIGN RELATIONS

• Belgian domestic and international cooperation within its own areas of responsibility

• Possibility of concluding agreements and contracts • Acceptance of international contracts

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 23 REGIONAL AUTHORISATIONS

Protection of listed monuments Tourism and sites and excavations

Supervision and financing of the nine Employment German-speaking communities and the associated organic law

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 24 ACCEPTANCE OF ADDITIONAL REGIONAL AUTHORISATIONS (CURRENTLY UNDER NEGOTIATION OR SINCE 2020)

Road building Provincial Energy responsibilities (2020)

Housing (2020) Town and country planning (2020) © Kabelwerk

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 25 INSTITUTIONS GOVERNMENT

• Accountable to the parliament - constructive vote of no confidence possible • Four full- time ministers

Mr Oliver Paasch: Prime minister Mr Antonios Antoniadis: Deputy prime minister, Minister for families, health and social affairs Ms Isabelle Weykmans: Deputy prime minister, minister for culture, employment and tourism Ms Lydia Klinkenberg: Minister for education and scientific research • Government cabinet: total of 34 personal staff of government members

Seat of the government © Philippe Massotte

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 27 MINISTRY

• Administration of the German-speaking community • 439 members • Preparation and implementation of political decisions • Financing and organisation of over 300 services • The staff maintain close contact  with the citizens and subsidised organisations,  with many national and international partners. © Ministry of the German-speaking community © Specialist communication ministry department

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 28 SERVICES WITH SEPARATE MANAGEMENT

Three services with separate management:

MEDIA CENTRE

COMMUNITY CENTRES

SERVICE AND LOGISTICS

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 29 PUBLIC SERVICE ESTABLISHMENTS

• Employment office of the German-speaking community • Belgian radio and television centre, BRF • Department for independent living • Institute for mid-tier education and further training and training in small and medium- sized firms • Autonomous college in the German-speaking community • Kaleido East Belgium Centre for the healthy development of children and young people

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 30 3 BUDGET AND FINANCE THE BUDGET OF THE GERMAN-SPEAKING COMMUNITY: INCOME

Income 2020 EUR million TRANSFERRED INCOME 314.45 Federal State 237.73 Walloon Region 73.30 Federal State European Union 2.40 23% Walloon Region Luxemburg 1.01 Other Income OTHER INCOME 4.13 European Union 75% Sale of goods and services 2.45 Luxemburg Sale of land and properties 0.00 Interest and Capital Income 0.56 Other assigned revenue 1.12

TOTAL INCOME without proceeds from 318.58 borrowings Credit reimbursements 5.83 Proceeds from borrowing 168.00 TOTAL INCOME 492.41

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 32 INCOME - KEY FACTS

- The federalism of the Belgian state is characterized by persistent tendencies to transfer national competences to local authorities (communities and regions). This explains why about 98% of the revenues of the German-speaking Community are generated by transfers from the federal state and the Walloon Region. - The transfers from the Federal State are regulated and guaranteed by a special financing law of January 16, 1989, amended in 1993, 2001 and 2014. - The transfers of the Walloon Region are regulated by agreements and laws, with the safeguard straight loans to be contracted at the expense of the Walloon Region in case of non-payment. - Annual fluctuations are mainly due to: - Development of the gross domestic product - Inflation rate - Population figures - Large increase in 2015 due to the assumption of new competences (6th state reform) – slight decrease in 2020 (Corona) - Budgeted revenues are calculated and set according to the principle of prudence. In previous years, budgeted revenues were always realized at more than 100%.

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 33 THE BUDGET OF THE GERMAN-SPEAKING COMMUNITY: EXPENSES

Expenditures 2020 EUR million GENERAL EXPENSE 372.28 Education and training Parliament and Government 10.85 Family and Childcare Ministry, EU Programmes and regional 37.83 development Ministry, EU Programmes and regional development Education and training 122.80 33% 6% Health and Elderly Employment 23.72 7% Youth, Adult Education, Sport, Tourism 16.38 Local Authorities 8% Health and Elderly 37.15 Social affairs Social affairs 24.69 10% 12% 10% Energy and housing 11.91 Employment Family and Childcare 44.87

Youth, Adult Education, Sport, Local Authorities 27.77 Tourism Infrastructure 14.28

TREASURY 118.68 Debt service 101.75 Financing and participations 10.16 Interest burden 6.77

TOTAL EXPENSE 490.95

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 34 EXPENSE: KEY FACTS – PRE CORONA

- Budget policy in recent years driven by the goal of a balanced budget from 2018.

- Deficits in previous budget years are exclusively due to investment measures.

- The goal of a positive budget result in 2018 and 2019 achieved by:

- Strict cost control and reduction of functional costs,

- Bringing forward infrastructure projects in 2013-2017

- Integration of all institutions of the German-speaking Community into the same ERP system will allow real- time monitoring of compliance with the budget policy. Starting in 2020, the first two local authorities has been included.

- Compliance with the expenditure budget is always guaranteed through real-time monitoring as well as automatic controls in the ERP system. The realization rate of the expenditure budget is always below 100%.

- All institutions are audited by the Belgian Court of Audit.

- Long-term budget simulation (30 years) incl. sensitivity analyses

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 35 COVID 19 VS. BUDGETS 2020 - 2021

• The Corona pandemic affects the budget of the German-speaking Community on two levels, causing a cumulative deficit of about 120 million euros in 2020 and 2021, according to the current state of knowledge: • loss of income due to the deterioration of economic parameters • Additional expenditures in various areas • Procurement of equipment and supplies to combat the pandemic for schools, hospitals and retirement homes • Additional costs around the vaccination centers • Various support measures for the local economy (retail, Horeca, ...) • Measures to promote employment • Support for cultural and sports clubs • Upgrading salaries in the care sector • At the same time, investment measures are being planned to cushion the impact of the crisis and act countercyclically. This program amounts to 600 million euros, covers the period 2021-2029 and includes investments in school construction, care for the elderly, digitization, social housing and the climate plan. • The deficit 2021 as calculated by the High Financial Council is expected by approximately 92.3 M €. • New goals: • Structural budget equilibrium: 2025 • No new debt as of 2029

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 36 REAL-TIME DATA ON THE FINANCIAL SITUATION OF THE COMMUNITY

www.ostbelgienlive.be/Finanz-Monitor

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 37 4

DEBT MANAGEMENT AND FINANCING STRATEGY SITUATION AS OF 2020

in Mio Euro 2020* 2019

Financial liabilities . Notes Issued . CP or MTN < 1 Y 137,50 124,75 . MTN 329,05 248,55 . Loans 16,53 21,50 . Leasing, PPP and alternative financing 77,23 82,03 560,31 476,83 Other liabilities . Suppliers 17,24 9,62 . Taxes and salaries 12,83 12,19 . Other 1,30 0,00 31,37 21,82

Total liabilities 591,67 498,65

Current assets 53,20 18,18

Total net liabilities 538,47 480,47

* prov. non audited figures

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 39 DIRECT DEBT

Average term of the debt 600.000.000,00

500.000.000,00

400.000.000,00

300.000.000,00

200.000.000,00

100.000.000,00

0,00 2015 2016 2017 2018 2019 2020

< 1 Y 1 - 5 Y 6 - 10 Y 11 - 20 Y > 20 Y

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 40 ELEMENTS OF STRATEGY

Key elements of the debt management strategy are: • Centralisation of debt, no outsourcing for technical reasons in other corporate forms or complex structures. The whole dept is centrally managed. • Gradual extension of the debt maturity (short-term into long-term) to hedge the interest rate risk and better plannability, but also to be able to guarantee permanent market activity. • Ratio-based debt management to – control the interest burden in relation to the overall budget (max 3%) – map a theoretical repayment horizon. • Ensure sufficient financial sources to cope with unexpected fluctuations.

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 41 5 KEY INVESTMENT HIGHLIGHTS MAIN ARGUMENTS

- 98% of revenues come from the Belgian Federal State (M: Aa3 / S&P: AA / F: AA-, outlook stable/negative) and the Walloon Region (M: A2, outlook negative)

- Revenues: guaranteed by the financing law (Belgian Federal State) & possibility to take out a straight loan (Walloon Region) in case of non-payment of the amounts due

- Good revenue predictability due to macroeconomic developments (special financing law)

- Strict budget management

- Professional organization and highly efficient control instruments

- Healthy diversification of financing sources (type / content / interest rate risk)

- Well-considered approach to financial and risk management

- Cooke ratio 0%

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 43 6 USE OF PROCEEDS USE OF PROCEEDS

Planned issues:

Year Type/Maturity Amount (Mio EURO) 2021 EMTN 200 Maturities 3-4-7-10 Y 2022 EMTN 120 M: 5-15 Y 2023 EMTN 185 M: Tbc 2024 EMTN 145 M: Tbc 2025 EMTN TBC M: Tbc

Intended Use: Proceeds from new bond issues will be used to consolidate and refinance current (short-term) debt, to finance infrastructure investments and to cover current deficits due to the corona pandemic.

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 45 7

KEYTERMS AND CONDITIONS KEYTERMS AND CONDITIONS

Issuer German-speaking Community of Belgium / LEI 894500FEAHX2CLWHGX30 Rating of the issuer Unrated Entity of the Belgian Federal State (Community), registered with the Crossroads Bank for Enterprises under Legal Form/ Registration number 0225.205.492 Type of Programme EMTN dated 25 th may 2021, unrated Programme amount EUR 1,000,000,000 Arranger / Paying Agent Belfius Bank Dealer Belfius, ING, KBC/CBC, Morgan Stanley, LBBW Notes Fixed Rate, Floating, Zero-Coupon Currency of the Treasury Notes Any Minimum issuance amount, denomination EUR 100,000 Possible Maturities As from 1 month - 100 years

Direct, unconditional, unsecured unsubordinated, at all times pari passu among themselves and with all other Status of the Treasury Notes present and future unsubordinated and unsecured obligations of the Issuer

Governing law Belgian law Non-Payment, Breach of Other Obligations, Insolvency proceedings, Insolvency, Cross Default, Failure to take Events of Default action, Illegality

THE GERMAN-SPEAKING COMMUNITY OF BELGIUM 28.05.2021 PAGE 47 VIELEN DANK FÜR IHRE AUFMERKSAMKEIT BIS BALD IN OSTBELGIEN !

BENOIT WEYNAND FACHBEREICHSLEITER FINANZEN UND HAUSHALT

Gospertstraße 1 TELEFON +32 (0)475 861816 E-MAIL [email protected] B-4700 Eupen TELEFAX +32 (0) 87/552 891 WEB www.ostbelgienlive.be