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INVEST IN

CÓRDOBASUMMARY OF FINANCES

AND INVESTMENTANNUAL 2018

PUBLIC FINANCE POSITIONBUDGET EXECUTION

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FISCAL SOLVENCY RANKINGPERFORMANCE OF SUB-SOVEREIGN TITLES

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4 PUBLIC DEBT

BUDGETARY TRANSPARENCY INDEX6AGD IS ONE OF THE LEADING EXPORTING COMPANIES

7 CÓRDOBA ADDS INVESTMENTS AND CONNECTIONS WHICH ALLOWS TOCONSOLIDATE ITS AIR HUBCÓRDOBA ACCUMULATED INVESTMENT ANNOUNCEMENTS FORUS$ 1.3 BILLION DURING 2018CORDOBA BIOETHANOL REACHES FUEL SUPPLIERS

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9 A RECORD HARVEST IS EXPECTED FOR THE 2018/2019 PERIOD THE SOUTH CORDOBA IS THE MOST "BIOTECHNOLOGICAL" REGION FORPLANTING CORNVOLT MOTORS LAUNCHED ITS ELECTRIC CAR

THERE IS A DECREASE IN TRIALS AND WORK RISK INSURANCE IN CÓRDOBA1011

MORE COMPANIES CREATED IN CORDOBA AT THE INSPECTION OF LEGAL ENTITIES

CONTACT12

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SUMMARY

SUMMARY

INVEST IN CÓRDOBA 02

BUDGET EXECUTION

The 2018 budget execution reflects Córdo-

ba’s commitment with a better tax admi-

nistration and austere management of

its operating expenses. This conscious

effort allowed saving necessary resources

to execute an ambitious infrastructure

plan.

During 2018, total income grew more than

the inflation rate. Even in an adverse ma-

croeconomic context, with a decreasing

production level and high inflation rate,

Córdoba’s resources grew 0.3% above

price increases. One of the factors that ex-

plain this process are tax administration

improvements, which allowed to strictly

comply with the commitment of decreasing

distortive taxes, as agreed in the Fiscal

Consensus .

Another key factor in the public finance dy-

namics, was controlling operational expen-

diture. During 2018, net current expenditu-

re –this is, net of automatic transfers to

municipalities– increased less than

prices. This explains a 1.3% real decrea-

se. The combination of higher revenues

and less expenses resulted in an in-

crease of savings. They represent the

mass of available resources to finance ca-

pital expenditures. While in 2017, the cu

rrent account balance was 18.7% of avai-

lable incomes, in 2018 it reached 19.8%.

1

1 The Fiscal Consensus is a federal agreement between the Nation, the Provinces and the City of Buenos Aires signed in November 2017 in which the parties commit themselves to execute a series of actions in order to better manage the public sector. These include a decrease in tax pressure and the rationalization of the tax system.

PUBLIC FINANCEPOSITION


Source: Ministerio de Finanzas de la Provincia de Córdoba. Ver: http://www.cba.gov.ar/ejecuciones/ (1) It includes automatic revenues of national origin (National Coparticipation regime, especial laws and Federal Solidarity Fund), Provincial tax resources, Non-tax income, goods and services sells and current transfers.(2) Includes currents transfers (Provincial coparticipation regime – Law Nº 8,663) and capital transfers (Federal Solidarity Fund) towards Muni-cipalities and Communes.(3) Resources at the disposal of the Province once discounted the automatically distributed resources to Municipalities and Communes.(4) Net of current transfers to Municipalities and Communes in Coparticipation concept (Provincial Coparticipation Regime – Law Nº 8,663).(5) The exchange rate used for the year 2017 is that of the Central Bank average for the reference period ($ 16.6); for the 2018 budget, the ex-change rate of the Macro Fiscal Framework 2019 ($ 28.30) was used, while for the accumulated 2018 the average exchange rate was used January-September based on Comunicación “A” 3500 of Banco Central ($28,11).

EXECUTION2018

Table 1. Summary of Income and Expenses(Millions of ARS and US$)

CONCEPTTotal income (1) 150.042 9.062 173.106 6.158

20.369 1.230 23.823 847

129.673 7.832 149.283 5.310109.610 6.620 119.768 4.260

20.0631.25520.779 1.212 29.516 1.050

$ US$(5) $ US$(5) $ US$(5)2017 BUDGET

2018

128.667 7.771

17.357 1.048

111.311 6.72390.532 5.468

Automatically distributedresources to municipalitiesand communes (2)Net income (3) Net currentexpenditure (4)

15,5%18,7% 19,8%


The dollar-denominated debt at December 31st, 2018 was US $ 2,735 million. At the same time, the Province had financial placements for US $ 106.4 million. Therefore, the debt stock –net of financial placements–placements– was US $ 2,628 million. In 2018, Córdoba did not carry out new issuances of public securities and the pay-ment of amortizations, for a total of US $ 40.1 million, was completed in a timely manner.

The debt is equivalent to 58.7% of the total income re-ceived during the year. Consi-dering income projections for the next decade, debt servi-ces are equivalent to 4% of total estimated incomes.

As mentioned by Fix SCR in its last report published in December 2018, the Province long-term in-debtedness AA (arg) implies a very solid credit quality with respect to other issuers or issues in the coun-try, while short-term debt "A1 +" (arg), indicates the strongest ability to pay in time and form, with res-pect to other issuers or issues in the same country

frequently in short-term assets.

DespiteDespite the current situation capital market described above, it is impor-tant to note that in last three months Córdoba has reduced the yield spread respect to the sovereign by 30 bps for the longer term of the curve. This re-flects the internalization of the better situation regarding the Province’s public finances.

The yields of Córdoba Province’s issue reflect a better performance than many of Argentine provinces, however, since the end of the third quarter of 2018, there has been a shift in the sovereign and sub-sove-reign curves, due to a generalized decreasedecrease in prices of public securi-ties in the secondary market, which increase in implicit yields. Theseincreases can be seen more

PUBLIC DEBT MORE NEWSPERFORMANCE OF SUB-SOVEREIGN TITLES

2 The exchange rate used is the Central Banks last registered value for the month of December ($37,7).

2

Graph 3. Yield curve of sovereign and sub sovereign bonds

19

17

15

13

11

9

77

5

3

YTW%

Arg 19

Bs As 19

CABA 21

Bs As Ene 21

Modified Duration0 1 2 3 4 5 6 7 8 9

SOVEREIGN

CÓRDOBA

Arg 21 Arg 22 Arg 23 Arg 26 Arg 27

Arg 28 Arg 36 Arg 46

Bs As Jun 21

Cba 21

Bs As 23

Sta Fe 23

Bs As 24

Cba 24

Mendoza 24

Tierra delFuego 27

Salta 24

Chaco 24

CABA 27

Sta Fe 27Cba 27

Bs As 28Bs As 27

Entre Ríos 25La Rioja 25 SUB SOVEREIGN

Source: Bloomberg/Reuters al 28/12/2018

Arg 26 Arg 27Tierra delFuego 27

Sta Fe 27

CABA 21

Bs As 27


FISCAL SOLVENCY RANKING

The fiscal solvency ranking, by Barclays PLC, allows comparative assessment of the state of public finances in each pro-vince, considering their fiscal solvency. To get the job done, financial needs, exclu-ding capital expenditures, are compared with current revenues. The provinces that have the best rating are those that have low financial needs to meet current ex-penses. That is, provinces that are able to achieve operational savings that gives them flexibility and possibility of using re-sources to finance infrastructure works.

Córdoba is in the first position of the fiscal solvency ranking for years 2018-2019. Its public finance position allowed for a better ranking position than the City of Buenos Aires and Santa Fe, which are the two jurisdictions that follow. The gaps for rest of provinces are larger. ItIt’s important to mention that in previous rankings, Córdoba had the leading posi-ton as well.

According to the report, high levels of in-flation in 2018 had associated increases

in tax revenues greater than the wage increases of provincial employees. This contributed to improvements in the fiscal positions of provinces. In the case of Córdoba, the report highlights that even when executing an ambitious program of infrastructure works, it is expectedexpected that in 2019 Córdoba will have a fiscal surplus, minus the capital expenses, which will allow it to cover debt repayments in a timely manner. In the medium term there are no potential risks in the Province's debt.

Additionally, the Barclays report graphica-lly shows the relationship between the fiscal deficit, amortizations and financing needs (excluding capital expenditure) of the Argentine provinces related to their current revenues (Graph 2). It can be seen that Córdoba appears as the mostmost sustainable province, in fiscal terms, during the 2018-2019 period, given its low need for financing current expenses, fiscal surplus (before capital expenditure) and expirations for payment of amortizations.

Graph 1. Fiscal Solvency RankingCórdoba, City of Buenos Aires, and Santa Fe continue to lead our provincial ranking Average 2018-19 F, % of current income

Fiscal deficit ex-capex

Note: Estimated averages for 2018-19 reported. Source : Barclays Research Source : Barclays Research

1

2

3

4

5

6

77

8

9

10

11

15

10

5

0

-5

-10-10

-15

1

2

3

7

8

5

66

9

4

10

11

Córdoba

CABA

Santa Fe

Mendoza

Neuquén

Provincia de Buenos Aires

ChacoChaco

Salta

La Rioja

Entre Rios

Chubut

-10.7

-8.7

-8.0

-2.6

-2.5

4.2

4.44.4

4.4

5.2

6.1

6.3

Graph 2. Province’s Fiscal Position

Barclaysranking

Previousranking Province Financing needs ex capex

/ current income Amortizations Fin needs ex-capex

Chubut

Entre Rios

La Rioja

Salta

Chaco

Bs. As.

Neuquén

Neuquén

Mendoza

Santa Fe

CABA

Córdoba


BUDGETARY TRANSPARENCY INDEX

The Center for the Imple-mentation of Public Policies for Equity and Growth (CI-PPEC, for its acronym in Spa-nish) publishes annually, since 2013, the Provincial Budget Transparency Index (ITPP). This indicator seeks to comparte the budgetary trans-parency of each jurisdiction in Argentina. According to the report, "more transparency re-sults in greater opportunities for improving public debates, helps to improve accountabili-ty processes and to increase efficiency in the allocation of public resources." The methodology used to ela-borate the Index considers two main dimensions. On the one hand, the amount of detail of budgetary information pu-blished online. On the other, the opportunity of the informa

According to data from the Na-tional Secretariat of Agroin-dustry, Cordoba’s company AGD reached the fifth spot in the ranking of agricultural pro-ducts during 2018. The com-pany sent 6.71 million tons of grains abroad, being the main exporter of oleaginous flours with 4.22 million tons. The main buyers of Argentine products were Brazil and Vietnam. The firm was positioned in the top five, being the multinational Cargill the one that led the fo-reign trade of grains in the coun-try –shipping 9.6 million tons. The second place belongs to American ADM, with 7.3 million tons; followed by Bunge and COFCO. After adding AGD, it can be seen that these five compa-nies exported 54% of the total of grains sent from Argentina to fo-reign countries in 2018.

tion, that is, the delay with which the data is published. To do this, CIPPEC analyses the web sites of provincial Mi-nistries of Economy and Fi-nance, general accounting offices and budget offices.

As seen in the last report, be-tween 2013 and 2018, there has been a significant increa-se in the fiscal transparency of the provinces, placing 14 of the 24 jurisdictions of the country above the 7.5 points, in an increasingly competitive ranking.

The ranking placed Córdoba in the first place with a score of 9.9 out of 10, followed by Entre Rios (9.7) and Santa Fe (9.6). Córdoba has had the leading position in the ran-king of Provincial Budget TTransparency since 2014.

CórdobaEntre RiosSanta FeCABAChacoNeuquénBuenos AiBuenos AiresTierra del FuegoSan JuanMendozaRío NegroCatamarcaLa PampaPROMEDIOPROMEDIOSaltaJujuyCorrientesMisionesFormosaSanta CruzLa RiojaLa RiojaSantiago del EsteroChubutSan Luis

9,909,659,559,509,509,209,059,058,908,708,408,407,707,557,547,547,507,306,906,906,556,406,056,055,004,203,00

AGD IS ONE OF THELEADING EXPORTING COMPANIES

Province Ranking

Source : CIPPEC

Table 2. Ranking ofProvincial Budget

Transparency (2018 edition)


Norwegian Air Argentina, a low-cost airline which set up one of its operating bases at Cordoba's Ambrosio Taravella airport, began operating a new regular flight servi-ce between Cordoba and Buenos Aires from February 15th.

The initial flight, to Córdoba, depar-ted from Aeroparque and was crewed by the airline's local CEO, Captain Melhus and Captain Boese. The company's directors said they seek to help increase con-nectivity, stimulate tourism and create thousands of jobs in the country. Norwegian plans to trans-port 2.5 million additional passen-gers each year and plans to operate between 10 and 15 Boeing 737-800

aircraft in 2019. The company cu-rrently has 120 employees and esti-mates increase them to 230 by the end of this year.

In the last 4 years Cordoba’s air-port has doubled the number of people transported by plane. During 2018, 3.4 million passen-gers passed through Cordoba's Taravella Airport, 18% more than in 2017. Aerolineas Argentinas flew 37% of 535,000 new passen-gers of last year. The company claims that the Cordoba hub dou-bled the growth of passengers during 2018, while flights to and from Cordoba increased 13%– at a national level the increase was lower and reached 6%.

CÓRDOBA ADDS INVESTMENTS AND CONNECTIONSWHICH ALLOWS TO CONSOLIDATE ITS AIR HUB

Graph 4. Number of passengers at theIngeniero Ambrosio Taravella International Airport

Number of people

1.673.2661.947.798

2.240.428

2.901.691

3.388.000

Source: Organismo Regulador del Sistema Nacional de Aeropuertos, Ministerio de Transporte de la Nación Argentina.

2014 2015 2016 2017 2018

4.000.000

3.500.000

3.000.000

2.500.000

2.000.000

1.500.000

1.000.0001.000.000

500.000

0


CÓRDOBA ACCUMULATEDINVESTMENT ANNOUNCEMENTS FOR US$ 1.3 BILLION DURING 2018

CORDOBA BIOETHANOL REACHES FUEL SUPPLIERS

According to the Argentine Investment and International Trade Agency, during 2018, 23 new investment projects were announced in the Province of Córdoba. The announcements were for US$ 1.3 billion, which implies a 62% year-to-year growth.

DuringDuring the last quarter of the year, Córdoba accumulated US$ 323 million

dollars in investments, with 9 invest-ment announcements (Graph 5). The most important plan was announced by Proaco Group, which will allocate US$ 200 million for a real estate deve-lopment. The second most important investment project is Inverco with an investment of US$ 70 million. Then, AMD Turismo & Real Estate announ-ced invests for US$ 20 million.

Last February, the National Secretary of Energy published in the Official Gazette Resolution No. 57/2019 that promotes the production of bioethanol. This com-ponent is currently, mandatorily, as a local mixture with oil fuel. In this way, the national government increased the quotaquota of biofuel derived from corn that Bio 4, company from Río Cuarto, Cór-doba, can annually send to oil compa-nies –increasing from 50 to almost 82 thousand cubic meters.

In addition, Córdoba’s company Maíz Energía SA was awarded an additional quota of 58 thousand cubic meters. The partners of this firm are Porta Hnos., Óleos del Centro, Establecimiento Las Chilcas and Agropecuaria Los Mistoles, compa-nies that have advanced in recent years in

the development of MiniDest –small distilleries that produce ethanol and burlanda (input for animal feed) from corn fermentation.

AdditionallAdditionally, Porta Hnos began ex-porting equipment to set up modu-lar ethanol distilleries in Santa Cruz de la Sierra, Bolivia. This is conside-red the first export of “already built” plants and takes place within the fra-mework of a strategic plan for biofuel production in Bolivia –where the gover-nment seeks to introduce this type of fuel to save foreign currency and reduce environmental pollution. The plant, whose value is U$S 4 million, will be operational in June 2019 and its production capacity will be 5,500,000 liters per year.Source: Agencia Argentina de Inversiones y Comercio Internacional.

Inverco70

AMD20

GrupoProaco200

Otros33

Graph 5. Investment Projects announcedin the fourth quarter of 2018 US$ - Millions of US dollars

INVEST IN CÓRDOBA

A RECORD HARVEST IS EXPECTEDFOR THE 2018/2019 PERIOD

The Department of Agroeconomic Information of the Bolsa de Ce-reales de Córdoba estimates that summer production in the Province of Cordoba will be higher than 30 million tons. Soy-bean and corn, with 13.8 and 18.5 million tons respectively, are the main components of total produc-tion. Also, peanut production would be around 1.1 million tons, while sorghum production would amount to 0.3 million tons.

The estimation shows that soybean production will be 70% higher than

the previous season and 12% higher than the average of 2008-2019. This is explained by the higher crop yields -56% com-pared to the previous season- and the reduced lost area –69,500 ha representing only 1.7% of the total area planted.1.7% of the total area planted.

As far as peanut production is con-cerned, the current season would be 68% higher than last season, and 65% higher than the historical average respectively. This is due both the area sown is larger and there was an increase in yields.

09

THE SOUTH CORDOBA ISTHE MOST "BIOTECHNOLOGICAL"REGION FOR PLANTING CORN

VOLT MOTORS LAUNCHEDITS ELECTRIC CAR

According to the Survey of Applied Agricultural Technology of the Bolsa de Cereales de Buenos Aires, Córdoba is the largest corn produ-cing province in Argentina and leads the adoption of "biotechnolo-gy" –i.e. the cultivation of genetically modified (GM) seeds. This adop-tion grew throughout Argentina, going from 55% in 2017 to 77% in

2018. However, south of Córdoba (Río Cuarto, Juárez Celman, Pre-sident Roque Sáenz Peña and General Roca) surpassed that percentage, reaching 93% "biote-chnology" adoption. In the rest of the province the results also show a high use of genetically modified seeds - between 82% and 88%- depending the region.

The first electric car designed, de-veloped and produced in Córdoba, the Volt e1 was launched. The car offers an ecological option to Ar-gentine consumers, since it has zero gas emissions –due to its elec-tric motor– and a maximum speed –electronically limited- of 110 km/h.

The car’s technology was develo-ped in Cordoba and has more than 50% of its components of national origin. It currently does not have a direct competitor in the market. In

addition it has operating costs 90% cheaper than other conventional vehicles with combustion engine. The vehicles launched by Volt Motors are available in two ver-sions, for passengers -Volt e1- and a cargo van -Volt w1-.

The firm plans to install production and commercial offices in Buenos Aires and different regions of the country, within next five years. It is es-timated that 500 direct jobs will be created in the first stage of this project.

Graph 6. Soy production projection for 2018/2019

2015/16 2016/17 2017/18 2018/19

4400

4200

4000

3800

3600

3400

32003200

3000

40

35

30

25

20

15

1010

5

0

Source: Bolsa de Cereales de Córdoba

Harvestable surface

Thousands of hectares

qq/Ha.

Yield


MORE COMPANIES CREATED IN CORDOBAAT THE INSPECTION OF LEGAL ENTITIES

The Inspección de Personas Jurídicas (IPJ), – the office which is in charge of the control of the legality, registration and ins-pection of the institutional life of civil and commercial entities–introduced a 100% digital file system for registering new Public Limited Companies (PLC). ThroughThrough this mechanism, IPJ receives –via website- documents submitted by ci-tizens who want to create a new com-pany. Then, citizens received the answer in their emails. This new service offered by IPJ, makes entrepreneurial activity easier, allows for developing economic activities and generating new jobs.

The digital file system implemen-ted in IPJ occurs in a context of modernization of the Oficce. Thus, when in 2017 the constitution of a PLC consisted in 12 steps and took an average of 180 days, It was reduced to 6 days.

The impact of digitization and ad-ministrative simplifications has led to greater dynamism for creation and registration of companies at IPJ. In fact, 30% more companies were created per month in 2018 in comparison to 2017.

Graph 7. Number of companies created (average of inscriptions/monthly)

Source: Inspección de Personas Jurídicas

2017

167 2182018

250

200

150

100

50

0


THERE IS A DECREASE IN TRIALS ANDWORK RISK INSURANCE IN CÓRDOBA

Córdoba is one of the first juris-dictions to sign the national law that reformed the work risk system. This reform gives grea-ter agility, objectivity and simpli-city to the procedures that must be carried out by a worker who suffers an accident at work or su-ffers an occupational disease. In this way, labor conflicts with fal-sely increases labor costs can be reduced.

In order to achieve this objective, the law regulates a mandatory administrative procedure prior to trial. This responsibility is given to Medical Commissions of the Superintendence of Labor Risks (SRT). A particularity of Cordoba'sCordoba's acceptance to natio-nal law is that the Province has decided to take part in the su-pervision of functioning of Medi-cal Commissions.

During the first months of the reform, very good results were seen. According to SRT, labor trials were reduced by 68% after the change of process (September 2017), going from a monthly average of 953 trials to 306 per month.306 per month.

Administrative resolutions of dis-putes through medical commis-sions have resulted in lower costs of labor risk insurance. It benefits companies located in the Province. The average insu-rance cost was higher than 4% of the total wages, after 2018, period in which the reform was fully operational, the average cost was reduced to 3.3%. Other jurisdictions that did not sign the agreement, such as Santa Fe for example, even with a downward trendtrend in insurance costs, have higher costs than in Cordoba.

Graph 8. Number of trials carried outby workers in Córdoba

Source: Ministerio de Finanzas en base a SRT.

Month averagejan 10- aug 17

Month averageoct 17- oct 18

953-68%

306

1200

1000

800

600

400

200

00

Graph 9. Labor costs as % of total wages(2015-2018)

Santa Fe

Córdoba

2015 2016 2017 2018

4,84,7

4,3

3,8

4,24,1

3,8

3,3

54,84,64,44,243,83,83,63,43,23

Source: Ministerio de Finanzas en base a SRT.

Ramiro Sosa Navarro (Director) Ana Balestre (Chief Advisor)

Justo Erede (CFO)[email protected]

CONTACT

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