SECRETARIA MUNICIPAL DE FAZENDA City Finance Department An

SECRETARIA MUNICIPAL DE FAZENDA City Finance Department An Investment Grade Future for Rio September, 2011

Rio Momentum 1 Global Events Rio + 20 2011 Confederations Cup 2012 2013 450 th Anniversary of the city 2014 2015 2016 2 Global Visibility 3 Political Alingment – Federal, State and Municipal Governments © Rio Business: Official Agency of Rio de Janeiro City Hall, responsible for attracting and facilitating inward investments

Reasons for Rio’s turnaround ü Increasing public awareness, reflection and mobilization ü Along with macroeconomic stability the oil boom is bringing a remarkable boost to the local economy v Policies to spread the benefits for future generation ü Both at state and municipal level we are observing the adoption of appropriate public policies, marking an important difference from the past For ordering, please contact: v. liberatori@elsevier. com. br

What we have done so far (2009) ü Strong Fiscal Adjustment v Primary surplus of US$ 700 million (12% of Total Revenues) • Review of all contracts, reduction of at least 20% in expenditures of goods and services + 30% with commissioned staff (higher earners) • All investments were also re-evaluated and new priorities were set ü Strategic Planning Thinking Rio in 2020 v Project Management Office v Implementation of a performance-base model MERITOCRACY ü Improving Business Environment v Comprehensive program to reduce bureaucracy v Formalization of business and attraction of investors v New Investment Agency: www. rio-negocios. com For further information: www. pcrj. gov. b

What we have done so far (2010) ü FISCAL SUSTAINABILITY v Fiscal Transparency Report (*) v 30% increase in Total Revenues § US$7. 5 bn in 2009 to US$11. 6 bn projected for 2011 (54% increase) § Improvement in Collection Systems www. notacarioca. rio. gov. br v US$1 bn World Bank Loan -> Expanding Rio de Janeiro’s investment capacity: US$ 468. 7 mm in 2009 budget to US$2. 2 bn in 2011 ü INVESTMENT GRADE (*) Available at http: //www. rio. rj. gov. br/web/smf

World Bank Loan ü First DPL (Development Policy Loan) to a Municipality in the world ü Total Amount: US$ 1. 045 billion in two tranches to be repaid in 30 years ü Estimated gains of US$ 1. 25 billion to be used in new investments v Cost of debt with Federal Treasury reduced from IGP+9% to IGP+6% ü Three Strategic Pillars: v Fiscal Responsibility v Enhancing public services v Improving Municipal Management IGP = inflation index

Improvement in Expenditure Profile 2009 2010

Investments x Total Budget In US$ Millions YEAR INVESTMENTS [A] TOTAL REVENUES [B] % [A]/[B] 2005 348. 3 4, 882. 0 7. 1% 2006 426. 6 5, 439. 8 7. 8% 2007 545. 5 5, 946. 6 9. 2% 2008 527. 1 6, 847. 3 7. 7% 2009 250. 4 7, 292. 0 3. 4% 2010 975. 1 9, 527. 0 10. 2% 2, 193. 8 11, 790. 9 18. 6% 2011 * * LOA 2011 (Budget Law 2011) Current: US$ 2, 9 bi (23, 5% of Total Expenses) Source: City Hall

Investment Grade by Moody’s Baa 3 with a positive outlook (from Ba 2 with a stable outlook) ü Sustained record of positive trends in Brazil's operating environment ü Strong track record of city’s financial performance ü Resilience to the economic downturn in 2009 ü Prudent fiscal management v Improvements on tax administration and expenditure controls ü Predictable and stable intergovernmental transfers Source: Moody´s report, December 2010

Olympic Games ü A great opportunity to consolidate Rio´s turnaround ü Focus on investments that generate a permanent legacy for the citizens “The Olympic Games should serve the city. More than organizing the event itself, we want to make Rio a better place for our citizens and guests through profound transformations in transportation, urban infrastructure, environment and social development” üOlympic venues are being financed mainly through partnerships with private investments

Rio in 2016 Transportation - Implemented new intermodal system linking in the express ways (BRTS), trains, ferry and subway - Increase of high capacity transportation from 16% to 50% - Recovery of lagoon systems - 24 million trees (state) - More than 700 thousand people with access to sewage (AP 5) - Duplication of the City bike tracks (+150 km) - Reduction of 16% on gas emissions by 2016 Environment Urban Infrastructure - Harbor area renewed - 4 Olympic areas re-qualified, with full accessibility (benefits for 2 million inhabitants) - All the favelas re-urbanized (until 2020) - 100 thousand new residential unities built and legalized - English teaching in the municipal schools - Practice of sports spread in the whole public schools system Social Development

The portfolio of strategic projects is ambitious in terms of scale and impact to the population Housing Health • Morar Carioca • “Minha Casa, Minha Vida” • Primary care • First Aid Centers (UPAs) Sanitation • West Zone • Jacarepaguá drainage Strategic projects Transportation • Transcarioca • Transolímpica • Transoeste Education • Day Care Centers • Escolas do amanhã Urban revitalization • Sea Port Area

Some Strategic Sectors and Priorities

Rio – Top Investments Destination (FDI)

Private & Public Investment in the State (until 2020) North West USD 0, 36 Bi South-Center USD 0, 48 Bi North USD 81, 48 Bi Center South West USD 2, 36 Bi South USD 15, 37 Bi Sources: City Hall, Economic Development Dept. of the State USD 0, 29 Bi Metropolitan Region USD 27, 96 Bi Cost Planning City of Rio USD 0, 55 Bi © Rio Business: Official Agency of Rio de Janeiro City Hall, responsible for attracting and facilitating inward inv

GE Global Research Center Brazil Announced in Nov/09 an investment of USD 450 M in a R&D center in the area to be inaugurated by Jul/13 § § § BTC (Brazil Tech Center): GRC (Global Research Center) and Training Center Jobs: 300 PHDs Jobs Competition: SP, BH, Campinas e SJ dos Campos Competition Decision: Announcement on 10/Nov/2010 Decision Investments: USD 450 M initial investment- GRC USD 100 M + Learning Center USD 50 M + Annual Cost USD Investments 60 M New Opportunity: New operations/ JV´s in Energy and Illumination business areas Opportunity © Rio Business: Official Agency of Rio de Janeiro City Hall, responsible for attracting and facilitating inward inve

Leading Companies in Rio Most relevant companies with headquarters in Rio © Rio Business: Official Agency of Rio de Janeiro City Hall, responsible for attracting and facilitating inward investments

Rio’s Perspective - Financial Markets ü Possible businesses to be established in Rio: § Reinsurers § “Back-offices” § Asset Managers – funds and portfolios § International players (Hedge and Endowment Funds) § Private Equity / Venture Capital § Alternative energy funds and products (+others) § Compliance and Auditing Firms § P&D, Research and Technological Centers ü Public-Private Partnership – Grupo Financeiro Carioca § RIO INVESTORS DAY

May 30 and 31, 2011 Copacabana Palace Hotel

MASTER SPONSORS STANDARD SPONSORS • • • • • • • BTG Pactual Bradesco Braskem Cetip Grupo EBX ICAP Corretora Itaú-Unibanco Light Multiplan Oi (ex-Telemar) PDG Petrobras Santander Société Générale Vivo Ambev Aliansce BM&FBovespa NEO Energia Queiroz Galvão Exploração e Petróleo Santander São Carlos Empreendimentos Souza Cruz Sul América Tim Tractebel Energia Usiminas

EVENT FORMAT üA Two-day CEO/CFO conference: v 12 sector panels of different segments of the Brazilian Economy moderated by some of the most prestigious "sell side" analysts from each of the specific sectors (Roundtables with Companies’ Senior Management) v Exclusive room for Individual Meetings between Companies and Institutional Investors (one-on-one meetings or group meetings) ü Target: International and Brazilian Institutional Investors (present and prospect) and Investors interested in Rio de Janeiro projects (Private Equity, Infrastructure, Strategic Investors, etc) ü Presence of 42 publicly traded companies (Ambev, Alliansce, B 2 W, BM&FBovespa, Bradesco, Braskem, BRMalls, Cetip, CSN, DASA, Equatorial Energia, Fleury, Gafisa, Gerdau, Grupo EBX, Icap Corretora, Itaú-Unibanco, LASA, Light, Marfrig, MRV, Multiplan, NEO Energia, Oi, Odontoprev, Petrobras, PDG, Queiroz Galvão Exploração e Produção, Santander, São Carlos Empreendimentos, Societe Generale, Souza Cruz, Sul América, TIM, Tractebel Energia, Usiminas, Vale e Vivo)

RIO INVESTORS DAY - 2011 ü More than 800 institutional investors both national and international (eg. GIC, Credit Agricole, Aberdeen, Fidelity, Templeton, Baillie Gifford, Blackrock + local pension funds) ü Presence of representatives from the highest Municipal and State level. Also representatives from President Dilma Rousseff new government were invited to speak during breakfasts and lunches: • • • Mr. Eduardo Paes, Mayor of the City of Rio de Janeiro Mr. Luiz Pezão, Acting Governor of the State of Rio de Janeiro Mr. Aldo Mendes, Director of Monetary Policy of the Central Bank of Brazil Mr. Luciano Coutinho, President of BNDES Mr. Henrique Meirelles, ex-President of the Central Bank of Brazil Ms. Maria Helena Santana, President of CVM

2 nd SAVE THE DATE May 21 and 22, 2012

Eduarda Cunha de La Rocque Secretary of Finance Tel: +55 21 29763500 erocque. smf@pcrj. gov. br Thank you Rio, the best place to live and work of the Southern, I do believe!