This document provides an outlook for Brazil in 2015. It summarizes that fiscal slippage was significant in 2014 but is being corrected through adjustments to spending and revenues. It also notes that while the current account deficit has widened, foreign direct investment remains strong. Overall, it expresses optimism that Brazil has not wasted its commodities bonus and has the means to make necessary adjustments to foster new growth, with improved fiscal indicators and increases in productivity.

1. BRAZIL – 2015 Outlook
Joaquim V. F. Levy
New York – February 18 2015

2. BRAZIL 2015 – LEARNING BY DOING

3. BRAZIL 2015 – LEARNING BY DOING
Hitachi Feb 2014
Nissan Apr 2014
Knauf June 2014 Itaipava Brewers Apr 2014
Brotas 2014
Basf 2014
Nissan Apr 2014
Saint Gobain May 2014
And dozens of others…

4. BRAZIL 2015 – LEARNING BY DOING
Petrobras – Investment Spending (R$ Billion)
Brazil Monthly Average Oil and Gas Production

5. BRAZIL – 2015 Outlook
The fiscal slippage was significant in 2014 – and it is being corrected!
Non Financial Public Sector Primary and Nominal Balance*
5
Source: Central Bank / Projections from 2015 to 2017:Budgetary Guidelines Law Revised Draft 2015 for “Budget”, and Focus Report as of (01/30/2015) for “Market”.
* The projections assume Real GDP growth equal 0.8% in 2015, 2.0% in 2016, 2.3% in 2017.
3.3
3.7 3.8
3.2 3.3 3.4
2.0
2.7
3.1
2.4
1.9
-0.6
-5.2
-2.9
-3.6 -3.6
-2.8
-2.0
-3.3
-2.5 -2.6 -2.5
-3.2
-6.7
1.2
2.0 2.0
-4.1
-2.7 -2.5
1.10
2.00 2.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
%GDP Primary Nominal Budget Estimates Market

6. BRAZIL – 2015 Outlook
Expansionary Fiscal Policies led to a rise in the Gross Debt / GDP ratio
General Government Gross Debt vs. Net Public Sector Debt (as % of GDP)*
6
Source: Central Bank / Projections from 2015 to 2017: Budgetary Guidelines Law Revised Draft 2015 for “Budget”, and Focus Report as of (01/30/2015) for “Market”.
*The projections assume Real GDP growth equal 0.8% in 2015, 2.0% in 2016, 2.3% in 2017.
17.2%
10.6%
35.3% 33.6%
36.7%
37.4% 37.4%
37.1%
58.8%
56.7%
63.4% 64.1% 63.3% 62.5%
37.0% 36.2% 36.0%
0%
10%
20%
30%
40%
50%
60%
70%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015*
2016*
2017*
NPSD
Reserves
Public Financial Institutions
GGGD Budget
Budget
Market
¼ of the public debt (17,2%of GDP is backed
by non-monetized international reserves

7. BRAZIL – 2015 Outlook
50
70
90
110
130
150
170
190
210
230
250
2007 2008 2009 2010 2011 2012 2013 2014e
A Median
Russia
South Africa
BBB Median
Mexico
Brazil
Colombia
India
Turkey
Peru
Expanding Debt/GDP ratios have not been uncommon in recent years
General Government Gross Debt / GDP Ratio – Selected Emerging Markets (Base 100 = 2008)
7Source: Central Bank (Brazil) and IMF (Fiscal Monitor). For Brazil 2014’s debt ratio reflects year-end number.

8. BRAZIL – 2015 Outlook
Additional Treasury Loans to BNDES are not a policy instrument anymore
BNDES funding sources – BRL bn - cumulated
8
Source: National Treasury, BNDES

9. BRAZIL – 2015 Outlook
Tax breaks and tax expenditures contributed to the fiscal slippage
9
Revenue losses doubled in the 2012-2014 period, reaching 2% of GDP
Source: MoF/RFB
Tax/Contribution – BRL bn 2012 2013 2014
Payroll for selected sectors 3.7 12.3 21.6
CIDE-fuel 8.5 11.5 12.7
IPI (industrialized) –all categories 9.7 11.8 10.8
Cesta Básica (Ninimum Consumption Basket) 1.0 6.8 9.3
“Simples” and MEI (Individual Micro-entrepreneur) 5.7 6.3 7.2
IOF – (Consumer’s Credit Lines) 2.3 3.6 4.0
Nafta and Ethanol - 1.9 3.6
Corporate Profit - 1.7 1.8
Public Transportation - 0.7 1.4
Broad band Telecom Networks - 0.6 1.0
Other 15.6 21.4 30.6
Total 46.5 78.6 104.0

10. BRAZIL – 2015 Outlook
10
4.81%
4.46%
4.31% 4.30%
4.45%
4.37%
4.31%
4.68%
4.42%
4.33%
4.24%
4.18%
4.28%
4.10%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Social Transfers rose faster than the Federal Public Sector Payroll
Payroll - % of GDP
Main Social Transfers - % of GDP
Unemployment Benefits rose
from 0,5% of GDP to 1,1% of
GDP
The General Regime Social
Security transfers rose from
6,0% to 7,2%
Other Expenditure - % of GDP

11. BRAZIL – 2015 Outlook
There are some short terms challenges, but we have NOT wasted the commodities bonus
The message from
2005 is still true,
and despite some
slippages, the
government has the
will and the means to
make the necessary
adjustments to
respond to the new
global environment
and foster a new
cycle of growth, with
improved fiscal
indicators and
increases in labor
productivity
(2004-2005 STN presentations)

12. BRAZIL – 2015 Outlook
Adjustments include significant structural reforms (MP 665)
Nominal Expenditure Growth - % Y-o-Y
12Source: National Treasury, CSFB, Social Security, Min. of Labor

13. BRAZIL – 2015 Outlook
-24 -23
-8
4
12
14 14
2
-28
-24
-48 -48 -54
-81
-86
-78
-70 -65
33
22 17 10
18 15 19
35
45
26
48
49 65 64 60 59 60 59
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*2016*2017*
Current Account FDI
The Current Account Deficit has widened, but FDI remains strong
[(Current Account Deficit + FDI) * (-1)] - % of GDP Current Account Balance x FDI (US$ bn)
Source: Central Bank - Market Expectations (FOCUS 01/30/15)
Source: Central Bank
»High FX linked debt
» ‘02 FX-Reserves: USD 38 bn
»Low FX linked debt
» FX-Reserves:USD374.015 mi (Jan/15)
13
6.0
3.2 2.8
1.2
0.5
-1.5 -1.5
-4.7
-7.3
Brazilian share on world’s FDI (%)
1.3
1.7
2.5
2.1
3.4
4.0
4.8
4.4
2006 2007 2008 2009 2010 2011 2012 2013*
FDI in USD has doubled in the 2010s
vis-à-vis the 2000s

14. BRAZIL – 2015 Outlook
Infrastructure Program (US$ bn)
14
The participation of the private sector in infrastructure investment is a reality
Source: EPL, EPE, MME., National Treasury / US$ 1 = R$ 2.30
Concessions have been a successful way to expand the infrastructure in the last 20+ years

15. BRAZIL – 2015 Outlook
Growth in installed capacity in GW
15
Electricity Potential Production keeps increasing
Economic Policy

16. BRAZIL – 2015 Outlook
Growth in Consumption GWh
16
Electricity Consumption has grown significantly – especially among households
Economic Policy
GWh var. % GWh var. % GWh var. % GWh var. % GWh var. %
Brasil 415.683 8,2% 433.034 4,2% 448.105 3,5% 463.335 3,4% 473.395 2,2%
Residential 107.215 6,4% 111.971 4,4% 117.646 5,1% 124.896 6,2% 132.049 5,7%
Industrial 179.478 10,9% 183.576 2,3% 183.475 -0,1% 184.609 0,6% 178.055 -3,6%
Services (commerce) 69.17 6,0% 73.482 6,2% 79.226 7,8% 83.695 5,6% 89.819 7,3%
Other 59.82 8,2% 64.006 4,2% 67.758 3,5% 70.136 3,4% 73.472 5,2%
2010 2011 2012 2013 2014
2010 2011 2012 2013
Brasil 113.97% 109.37% 105.67% 102.20%
Residential 123.17% 117.98% 112.25% 105.70%
Services 129.72% 122.15% 113.31% 107.30%
Residential Industrial Service
2010 25,8% 43,2% 16,6%
2011 25,9% 42,4% 17,0%
2012 26,3% 40,9% 17,7%
2013 27,0% 39,8% 18,1%
2014 27,8% 37,8% 18,9%
Consumption in 2014 compared with previous years Consumption share by segment

17. BRAZIL – 2015 Outlook
Local-currency Project Bonds have shown new ways to finance infrastructure
17
Source: National Treasury, Anbima,Bloomberg
Note: Debentures’ Yield Rates represented by and average at issuance date. NTNB curve reflect secondary market rates as of Feb-10th-2015.
2,024
1,247
200
1,235
681
2,705
311
168 151 64
5.47%
5.55%
7.05%
6.64%
4.28%
7.93%
6.81%7.37%
7.39%
8.38%
6.10%
6.28%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
0
500
1000
1500
2000
2500
3000
5Y 7Y 8Y 10Y 11Y 12Y 13Y 14Y 15Y 17Y
Volume - BRL bn Yield % p.y. + CPI NTNB Treasury Curve
Outstanding volume ( BRL mn) and Yield (% p.y.)

18. BRAZIL – 2015 Outlook
Infrastructure Debentures Holders - as of Dec-14
18
Source: National Treasury, Cetip, Anbima, BTG Pactual
Total Outstanding – BRL 15.14 bn
»Non resident investors hold roughly 14% of these debentures compared to 18% of domestic debt
» Retail Investors hold BRL 5.20 bn (34.35%) of the outstanding debentures. They are deposited either in
banks or brokers.
77.38%
17.73%
4.89%
Dec/14
Public Debt Holders

19. BRAZIL – 2015 Outlook
Real Interest Rates have shown a secular decline and Inflation expectations are converging again
Medium and Long Term Real Interest Rate* Expected Inflation (%)
Source: National Treasury
* NTN-B: CPI linked bonds. Until Jan-10, maturing in 2024, 2035 and 2045,
after that maturing in 2030, 2040 and 2050.
Source: Central Bank
* Market Expectations – Central Bank – FOCUS January 30nd 2015
19
6.12%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
9.5%
Oct-04
Apr-05
Oct-05
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14

20. BRAZIL – 2015 Outlook
Long Term Securities yields continue to be attractive (and above the Selic)
Average Return of Public Bonds–ANBIMA Market Index (IMA) vs Overnight Rate (CDI)
20
» Brazilian Local Government Bond market presents opportunities in both fixed rate and inflation-linked securities.
Source: ANBIMA
Obs.: IRF-M considers all fixed rate bonds outstanding (LTN and NTN-F). IMA-B considers all inflation linked bonds outstanding (NTN-B). IMA-Geral is the most
comprehensive index and is the sum of IRF-M, IMA-S (floating rate index), IMA-C (NTN-C) and IMA-B.
Public Debt Management
2010 2011 2012 2013 2014
Average
2010 -2014
IMA-B IMA-B IMA-B CDI IMA-B IMA-B
17.00% 15.10% 26.70% 8.10% 14.50% 12.66%
IRF-M IRF-M IRF-M IRF-M IRF-M IRF-M
11.90% 14.50% 14.30% 2.60% 11.40% 10.94%
CDI CDI CDI IMA-B CDI CDI
9.70% 11.60% 8.40% -10.00% 10.80% 9.72%
Return
1st
2nd
3rd

21. Fiscal e Monetary
Responsibility
Inflation and Fiscal
Targets;
Respect of contracts
Credit, Tax, and
Judiciary reforms;
Incentives to
innovations and Trade
Effective &
affordable Social
Security safety net
Entrepre-
neurship
Social Security reform
BOLSA-FAMÍLIA
Remembering policy commitments & goals ….
Pillars of Development
THEN(2003)
21
Changes in Federal and State VAT
Expansion of the SIMPLES and “doing
busines” initiatives
Focus on increasing international Trade
Increasing technical
and college-level
training
Foster increase in labor
supply
Focus on the gross
public debt
Accelerate concession/
PPP opportunities
NOW(2015)
 Working hard towards…

22. Thank you
… getting ready for 2016 !