1 FISCAL PLAN FOR PUERTO RICO ECONOMIC GROWTHMARCH 31, 2017

2 DISCLAIMER The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), the Government of Puerto Rico (the “Government”), and each of their respective officers, directors, employees, agents, attorneys, advisors, members, partners or affiliates (collectively, with AAFAF and the Government instrumentalities the “Parties”) make no representation or warranty, express or implied, to any third party with respect to the information contained herein and all Parties expressly disclaim any such representations or warranties. The Government has had to rely upon preliminary information and unaudited financials for 2015 and 2016, in addition to the inherent complexities that are part of a government in transition, especially after a prolonged period of public finance obscurity. As such, AAFAF and the Government have made certain assumptions that may materially change once more clarity and transparency takes hold, especially after the Government issues the past due audited financials for and 2016 later this year. The Parties do not owe or accept any duty or responsibility to any reader or recipient of this presentation, whether in contract or tort, and shall not be liable for or in respect of any loss, damage (including without limitation consequential damages or lost profits) or expense of whatsoever nature of such third party that may be caused by, or alleged to be caused by, the use of this presentation or that is otherwise consequent upon the gaining of access to this document by such third party. Any statements and assumptions contained in this document, whether forward-looking or historical, are not guarantees of future performance and involve certain risks, uncertainties, estimates and other assumptions made in this document. The economic and financial condition of the Government and its instrumentalities is affected by various financial, social, economic, environmental and political factors. These factors can be very complex, may vary from one fiscal year to the next and are frequently the result of actions taken or not taken, not only by the Government and its agencies and instrumentalities, but also by entities such as the government of the United States. Because of the uncertainty and unpredictability of these factors, their impact cannot be included in the assumptions contained in this document. Future events and actual results may differ materially from any estimates, projections, or statements contained herein. Nothing in this document should be considered as an express or implied commitment to do or take, or to refrain from taking, any action by AAFAF, the Government, or any government instrumentality in the Government or an admission of any fact or future event. Nothing in this document shall be considered a solicitation, recommendation or advice to any person to participate, pursue or support a particular course of action or transaction, to purchase or sell any security, or to make any investment decision. This document does not constitute an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls or other attestation or review services in accordance with standards established by the American Institute of Certified Public Accountants or any other organization. Accordingly, the Parties do not express an opinion or any other form of assurance on the financial statements or any financial or other information or the internal controls of the Government and the information contained herein. By receiving this document, the recipient shall be deemed to have acknowledged and agreed to the terms of these limitations. This document may contain capitalized terms that are not defined herein, or may contain terms that are discussed in other documents or that are commonly understood. You should make no assumptions about the meaning of capitalized terms that are not defined, and you should consult with advisors of AAFAF should clarification be required.

3 TABLE OF CONTENTS HISTORY AND ROOT CAUSES OF THE CRISISECONOMIC PROJECTIONS KEY FISCAL / ECONOMIC MEASURES STRUCTURAL REFORMS FISCAL PLAN IMPLEMENTATION OVERSIGHT BOARD SUPPORT

4 GOVERNMENT CENTRIC ECONOMIC MODEL

5 HISTORY AND ROOT CAUSES OF THE CRISISLost of Population Weak Economy Goverment dependant economy that excludes the private sector. ( “CROWDING OUT”) Loss of income to the Government Increase of public spending based on inflated forecasts Deficit mitigated with debt and loans to cover operational expenses.

6 HISTORY AND ROOT CAUSES OF THE CRISISDifference between projected and actual GNP: , -20.4% , -5.8% (last 10 years and comparable to fiscal plan projections), -20.9% Difference between projected and actual Revenue , -$4,244 MM

7 HISTORY AND ROOT CAUSES OF THE CRISIS

8 HISTORY AND ROOT CAUSES OF THE CRISIS

9 OUR APPROACH TO TRANSFORM OUR GOVERNMENT AND SOCIETY

10 PUERTO RICO: OPEN FOR BUSINESSOUR MISION PUERTO RICO: OPEN FOR BUSINESS Tax Reform & Simplification Labor Reform for Competitive Workforce Services Evaluation System (External & Government) Permits Reform & Simplification Energy Reform for Cost Reduction

11 ECONOMIC PROJECTIONS Aggregate Gov protection, +8.1%- Aggregate Board guidance, -0.7% - Aggregate difference, 8.8% - Average difference over 10years, 0.9%

12 REDUCING HEALTHCARE SPENDING

13 REDUCING HEALTHCARE SPENDING

14 CURRENT EDUCATION SYSTEM

15 TRANSFORM EDUCATION

16 STRUCTURAL REFORM MEASURES

17 STRUCTURAL REFORM MEASURES

18 STRUCTURAL REFORM MEASURES

19 STRUCTURAL REFORM MEASURES

20 INFRASTRUCTURE / P3 REFORM – P3 Program

21 STRUCTURAL REFORM MEASURES

22 EDUCATION AND HEALTH AS ECONOMIC DRIVERSInfrastructure for new schools Investment on technology Federal funds for health Long Term:  Centers for medical and educational tourism New model provides funds to flow of capital to the industry and appropriate payment to medical professionals Voucher system and NGO programs provide flow of capital

23 FISCAL PLAN IMPLEMENTATION

24 FISCAL PLAN IMPLEMENTATION

25 FISCAL PLAN IMPLEMENTATIONThe Oversight Board needs TO PLAY a critical role by advocating and getting results on behalf of Puerto Rico for Executive branch and Congressional measures Healthcare funding Secure Federal funding for Medicaid program in Puerto Rico after Affordable Care Act and support an increase in the level of Federal funding for healthcare in Puerto Rico to the level of parity with the States Critical milestone: Continuous Resolution (~April 28th) Aggressive peruse best interests for Puerto Rico in: Border Tax Tax Reform AHCA Infrastructure bank Execution in Congress of Taskforce recommendations Census Bureau – Electronic Export Information (EEI) Requirement Eliminate the requirement for the filing of an EEI for shipments to/from Puerto Rico and the mainland US Bureau of Economic Analysis – State Economic Accounts Take ownership of conducting the surveys and calculating the state economic accounts for Puerto Rico Procurement Technical Assistance Center (PTAC) – Federal Contracting Center Channel a greater percentage of the Federal procurement budget to companies providing goods and services from PR Employment Based (EB) Visas Stimulate the Immigrant Investor (EB5) program and carve out an Exceptional Ability (EB2) program quota for PR Procure human resources US Digital Service - PR Innovation & Technology Service Detail top Federal employees to joint projects in technology, procurement, infrastructure education, heath, treasury and other areas Welfare Reform Amend relevant Federal program regulations to provide for a progressive transition from welfare to the formal economy