BOGOTÁ DISTRITO CAPITAL. Agenda Introduction to the District of Bogotá Economic, Social Developments and Infrastructure Fiscal Situation Budget Public.

BOGOTÁ DISTRITO CAPITAL

Agenda

• Introduction to the District of Bogotá

• Economic, Social Developments and Infrastructure

• Fiscal Situation

• Budget

• Public Debt

Introduction to the District of Bogotá

The District of Bogotá• Bogotá is the capital city of Colombia and it is

strategically located in the geographic centre of the American continent; in the eastern Andes mountain range and 1 hour away from both the Atlantic and Pacific Oceans

• With over 7.3 million residents*, the District of Bogotá is among the 40 most populated urban centers in the world, and houses 15.7% of Colombia’s total population

• Bogotá is divided into 20 localities that together comprise the District

• The district is governed by a Mayor, a District Council, local administrative boards and other local authorities

• The current mayor is Mr. Samuel Moreno Rojas who was elected in 2003 and will serve until December 2007

* According to the data from the 1993 Census

Investment Highlights• Sustainable economic growth in both the District and the Country

• Bogotá is within the top ten cities in Latin America in terms of competitiveness

• Considerable increase in tax collection over the last 5 years

• Reduction of tax evasion

• Public spending austerity and priority in infrastructure investment

• Responsible handling of public debt and good pension coverage

• Sound financial statements and high levels of public information disclosure

• Employment and income generation in the region

• Modern integrated information systems

• High degree of financial regulation and public spending controls

Economic, Social Developmentsand Infrastructure

22,9

22,7

22,6

22,4

22,0

22,1

21,40

21,60

21,80

22,00

22,20

22,40

22,60

22,80

23,00

2002 2003 2004 2005 2006p 2007p

%

Bogota’s Contribution to Colombian GDP

Improving Economic Situation

Economic Structure Inflation

Economic Growth (Real GDP)

Source: Dane y SDH-Dirección de Estadísticas y Estudios Fiscales

4.3%20.8%15.5%

15.4%7.6%

6.0%13.2%

11.9%9.0%

8.4%29.9%

16.7%

20.6% 20.9%

Bogota Colombia

Other ServicesFinancial, and Real Estate Transportation and CommunicationsCommerceConstructionIndustryAgriculture Mining and Others

7,56,8

4,74,93,9

1,9

4,3

3,3

6,9

5,5

7,6 7,8

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

2002 2003 2004 2005 2006p 2007p

%

Nation Bogotá

5,57

4,13

4,84

5,38

5,98

6,93

6,99

6,49

5,50

4,48

4,85

5,69

3,00

3,50

4,00

4,50

5,00

5,50

6,00

6,50

7,00

7,50

2002 2003 2004 2005 2006 2007

%

Bogotá Nation

• During the 2002-2007 period the unemployment rate decreased at an average annual rate of 16.7% in 2002 to 9.1% in 2007

• Poverty rates decreased from 38.9% in 2002 to 23.8% in 2007, which makes Bogotá the Colombian city with the lowest poverty levels compared to other major cities

Unemployment Levels in Bogotá when Compared to other Major

Colombian Cities

Reduction in Poverty and Unemployment

Percentage of Population Bellow Poverty Line

Source: Dane, census 1993 y 2005. SDH, Dirección de Estadísticas y Estudios FiscalesMisión para el diseño de una estrategia para la reducción de la pobreza y la desigualdad – MERPD

15,714,9

12,9

11,3 11,1

15,814,7

14,1

12,7 13

9,1

10,3

4,00

6,00

8,00

10,00

12,00

14,00

16,00

18,00

20,00

2002 2003 2004 2005 2006 2007

%

Bogotá Mayor cities without Bogotá

23,8027,00

33,70

38,90

3,404,206,30

9,10

0,00

5,00

10,00

15,00

20,00

25,00

30,00

35,00

40,00

45,00

2003 2004 2005 2006

%

Poverty Line Extreme Poverty Line

• Investments in the District’s security infrastructure produced a significant decrease in criminality, including, an average decrease of 34.0% in murder rates per 100,000 inhabitants from 2002 (28.5 homicides per 100,000 inhabitants) to 2006 (18.8 homicides per 100,000 inhabitants);

• Improvements in the health sector, made through the renovation or construction of hospitals and the development of social health programs, have produced a significant decrease of certain mortality rates, and the coverage of the social security system has increased from 69.7% in 2002 to 72.7% in 2005

Improving Social Situation

Increase in Health Expenditure

396 391331

585

824

668593686

599

155

175232364

934930 12

1,2801,2241,099

757873861

0

400

800

1,200

1,600

2002 2003 2004 2005 2006 2007

Milli

ons

of R

eal P

esos

as

of 2

006

Transfers from Federal Government Bogota District ResourcesOw n Resources Total FFDS

Improving Social Situation

The District has contributed to the improvement in the public education system through the increase of spaces available for new student and the construction of educational infrastructure. In particular there has been great advance in the following areas:

– Guaranteed free education – School meals– Subsidies tied to school assistance– School transportation – Health programs in schools– Distribution of school supplies

Improving Social Situation

0

40

80

120

160

200

240

280

Enero

1998

Julio

Enero

1999

Julio

Enero

2000

Julio

Enero

2001

Julio

Enero

2002

Julio

Enero

2003

Julio

Enero

2004

Julio

Enero

2005

Julio

Enero

2006

Julio

Enero

2007

Julio

Incid

ents

Prom: 188Jan 98 - Agu 02

Prom: 127Sept 02 - Dec 07

Máx: 262 Dec 99

Mín: 83 Oct 07

Violent Deaths

Deaths due to Automovilistic Accidents

Improving Social Situation

0

10

20

30

40

50

60

70

80

90

100

110

Ene

ro19

98

Julio

Ene

ro19

99

Julio

Ene

ro20

00

Julio

Ene

ro20

01

Julio

Ene

ro20

02

Julio

Ene

ro20

03

Julio

Ene

ro20

04

Julio

Ene

ro20

05

Julio

Ene

ro20

06

Julio

Ene

ro20

07

Julio

Inci

dent

s

Prom: 60Ene 98 - Oct 05

Máx: 101 Dec 99

Mín: 22Jan 06

Prom: 40Nov 05 - Dic 07

Robbery

Improving Social Situation

0

150

300

450

600

750

900

1050

1200

1350

Enero

1998

Julio

Enero

1999

Julio

Enero

2000

Julio

Enero

2001

Julio

Enero

2002

Julio

Enero

2003

Julio

Enero

2004

Julio

Enero

2005

Julio

Enero

2006

Julio

Enero

2007

Julio

Incid

en

ts

Prom: 741Jan 98 - Jun 01

Prom: 498Jul 01 - Dec 04 Prom: 1009

Jan 05 - Dec 07

Mín: 331Jun 03

Máx: 1068Mar 98

Máx: 1204 Dec 05

Note:It is not comparable with previous data.

Diversified Economic Growth

Composition of Bogotá Economy Growth Per Sector

Sources: Fedesarrollo-EOE.

Calculations: SDH, Dirección de Estadísticas y Estudios Fiscales

The district GDP is diversified among a number of economic sectors, the largest of which are the financial, real estate, and commercial service sectors followed by the greater service sector, and the manufacturing sector

29.90%

20.60%15.50%

13.20%

9.00%

7.50%4.30%

Financial , Real Estate, and Corporate ServicesServicesManufacturingCommerceTransportation and CommunicationsConstructionAgriculture, Mining and Others

6,8

10,5

9,3

3,5

4,65,9

7,9

4,0

9,2

5,0

3,7

7,5

2,1

-1,6

11,1

5,5

8,7

1,7

5,3

12,5

8,4

12,5

5,0

8,1

-2,00

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

2002 2003 2004 2005 2006p 2007p

%

Financial, real state and corporate services Services

Manufacturing Commerce

Infrastructure

Actually, Transmilenio consisted of 52.2 miles of main routes on nine avenues. Two additional phases of the project are schedule to completed by 2016. When finished, the total network will consist of 241 miles over 22 avenues. In addition to the project of Transmilenio, Bogotá plans the construction of a Metro, that would maintain the tendency of city-planning development and it would be integrated to the present system of massive transport

Fiscal Situation

Tax PolicyThe tax collection strategy of the District dictates as policy:

• Reduce tax evasion through control and prosecution

• Investment in the modernization of tax collection mechanisms

• Strengthening of tributary administration

• Management information systems optimization

The District’s tax collection system is divided in three main areas:

Direct Taxes Stamp Tax Indirect Taxes

Real Estate,and Vehicles

In Benefit of CultureDevelopment

and the Elderly

Commerce, Industry,Entertainment,

Urban Development, Cigarettes,Beer, Gasoline, Publicity,

Sporting Events, Poverty Fund

Improvement in Tax Collection

• The implementation of the District’s tax collection plans

has led Bogotá to increase its tax proceeds at a real

rate of 12% between 1991 – 2007

• The impressive growth is explained by the following

factors

– Increase in the tax base

– Actualization and broadening of the taxable base

– Reduction in the levels of tax evasion

– Implementation of cultural programs

– Establishment of new fiscal policies

Fiscal Situation

-2%

-4%

10%9%

7%

10%

22%

9%7%

-2%5%

6%

21%

74%

6%

15%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Gasoline surcharge implementation

Tax Reform ICA - Increase in Rates by 38% - Updated Cadastral

Economic Recession – Goods falling prices

Recovery in economic activity - automatic adjustment of the

properties by “IVIUR”.

Administrative Reform. Organic Statute of Bogota - New ICA period - System

Autoavalúo

Fiscal Situation

Other Tax

Motor VehiculeGasoline Surcharge

Beer Consumption

Real State

Industry & Commerce

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

2003 2004 2005 2006 2007

TAX 2003 2004 2005 2006 2007D Real

Average

Industry & Commerce 1.228.668 1.357.637 1.478.776 1.644.748 1.792.561 9,91%Real State 569.668 620.877 649.590 676.340 736.934 6,67%Beer Consumption 214.956 218.594 227.210 235.573 256.829 4,58%Gasoline Surcharge 264.144 295.721 308.582 294.273 291.168 2,65%Motor Vehicule 138.205 171.648 198.529 220.888 258.127 16,99%Other Tax 76.013 74.090 58.898 117.613 184.362 33,35%

Total Tax Revenues 2.491.654 2.738.567 2.921.585 3.189.435 3.519.981 9,03%

Millions of constant 2007 pesos

2,152,049

888,170602,673

367,728213,260

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2,003 2004 2,005 2006 2,007

Fiscal Situation

Tax Proceeds have Grown more than the Economy

Tax Collection has Increase Over Time

The Tax Revenues of the District Accounts for 4.3% of Bogotá GDPFiscal Structure

In million of 2004 real pesos

23% 22% 21% 21%

50% 51% 52% 51%

6% 7% 7% 7%8% 8% 7% 7%11% 11% 8% 8%

0%

20%

40%

60%

80%

100%

2004 2005 2006 2007

Real State Industry & CommerceVehicles Land DevelopmentCigarette Imports BeerGasoline Others

15,98%

7,80%

14,71%11,86%

15,95%

30,07%

7,55%

5,51%6,86%

3,29%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

2003 2004 2005 2006 2007

Tax Collection Growth (calculations over current prices)

Real GDP Growth

3,464,04 4,09 4,13 4,19 4,30

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

2002 2003 2004 2005 2006p 2007p

%

Digital Map – Second version (2007)

scale

1:1.000scale

1:1.000scale

1:10.000scale

1:10.000

scale

1:5.000scale

1:5.000

Real State Updating Process

Official map of Bogotá

It has 160 layers with myriad physical and legal characteristics of the city and its parcels: parks, boundaries, public buildings, etc.

The Cadastral information is updated in its three components

PhysicalAreas, boundaries, and

characteristics of the building are registered

Field visit

LegalCrossing

informationName of owner and ID number

Economic

Econometric models

Probabilistic samples

Valuations doneby experts

Commercial value of the property

Instrumental in the collection of an adequate property tax from the 2 million parcels in the city

Real State Updating Process

Fiscal year: 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Real State Updating Processes

Tax CollectionImprovement

Increase in the Tax Base

Note: Figures in million of 2007 real pesos

Industry and Commerce Tax

Vehicle TaxReal Estate Tax

512,629484,804

545,544569,668

620,877649,590

676,340

736,934

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2000 2001 2002 2003 2004 2005 2006 2007

1,792,561

1,644,748

1,478,7761,357,637

1,228,667

901,380805,409791,499

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2000 2001 2002 2003 2004 2005 2006 2007

258,127

220,888

198,529

171,648

138,205

101,356110,282

121,122

0

50,000

100,000

150,000

200,000

250,000

300,000

2000 2001 2002 2003 2004 2005 2006 2007

1.9 1.9

97.106

1.9

204.565

1.9

367.856

1.9

472.140

0.0

0.5

1.0

1.5

2.0

2.5

Millo

ne

s d

e c

ontr

ibu

ye

nte

s

2003 2004 2005 2006 2007*

1.9 1.9

97.106

1.9

204.565

1.9

367.856

1.9

472.140

0.0

0.5

1.0

1.5

2.0

2.5

Millo

ne

s d

e c

ontr

ibu

ye

nte

s

2003 2004 2005 2006 2007*

Note: Increased respect to 2003

Budget

CONCEPT 2002 2003 2004 2005 2006 2007

TOTAL REVENUES 3.358.038 3.798.090 4.136.493 5.376.845 6.154.309 6.219.189

Current Revenues 1.632.977 2.112.949 2.453.213 2.753.435 3.176.175 3.738.224Transfers 1.021.917 1.198.022 1.247.791 1.386.787 1.488.457 1.609.592Capital Revenues 703.144 487.118 435.489 1.236.622 1.489.678 871.374

TOTAL EXPENDITURES 3.124.323 3.722.116 3.872.240 4.853.623 6.026.480 6.309.2072.951.220 3.553.214 3.668.251 4.615.839 5.780.746 6.115.859

Current Expenditures 768.655 777.323 879.898 973.169 1.078.447 1.269.234Investment 2.182.565 2.775.891 2.788.353 3.642.670 4.702.299 4.846.624Debt Service 173.103 168.902 203.989 237.784 245.734 193.348

Budget• The level of leverage that the District can undertake is regulated and controlled by

national guidelines

• The structure of the debt contracted by District is governed by the “Politica de Control

de Riesgos de la Secretaria Distrital de Hacienda”. The regulator has imposed certain

technical criteria to evaluate and control the risks of the District Public Debt

Budget 2002 – 2007Millions of COP

Source: SDH Dirección Distrital de Presupuesto-SFD

Budget Behavior Income Growth 2002 – 2007

Transfer to the District 2002 – 2007

Expenditures 2002 – 2007

Millions of dollars

1,340 1,091

1,620

2,125

2,692

3,131

-

500

1.000

1.500

2.000

2.500

3.000

3.500

2002 2003 2004 2005 2006 2007

Current Debt Service Investment

799

665 607

522

431 357

-

100

200

300

400

500

600

700

800

900

2002 2003 2004 2005 2006 2007

Nation Others

3,087

2,749 2,354

1,731

1,172 1,367

-

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

2002 2003 2004 2005 2006 2007

Current Transfers Capital Revenues

Public Debt

National Debt and Risk Control Policies for Territorial Entities

Constitution

Article 364: Debt in territorial entities must not exceed its payment capacity.

Law 358/1997

Establish parameters to define payment capacity as well as the minimum operational savings in order to grant debt payment and an additional amount for investment purposes.

Establish two indicators:Debt Capacity: Interest/Operational Savings < 40%Sustainability: Balance/Current Revenues. < 80%

Law 617/2000

Establish operational expenditures limits for territorial entities

Operational expenditures/non specific destination revenues < 50%

Law 819/2003

Establish a financial planning instrument "Medium Term Fiscal Frame" through which primary superavit and sustainability goals are set for a time period of 10 years. The primary objective for this instrument is to grant debt sustainability and economic growth.

National Risk ManagementLevels

Debt Sustainability Payment Capacity

Source: DDCP - SDH

75,84% 63,47%

44,88%

53,16%

39,07%44,38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2002 2003 2004 2005 2006 2007

Límit 80%

5,66%7,94%

10,44%

9,97%

12,03%

23,56%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2002 2003 2004 2005 2006 2007

Limit 40%

Law 358/1997

Law 617/2000

37%

37,10%

38,90%

39,10%

41,20%

52,60%

0%

10%

20%

30%

40%

50%

60%

2002 2003 2004 2005 2006 2007p

Limit 50%

Politics, Guidelines and Toolsfor the risk management of the

District’s portfolio

• Administer by the District’s Directorate of Public Credit• VaR – Liability Portfolio• Liquidity Risk: Annual Amortization of 15% to 18% of total

debt

• FX Risk: Maximum of 20% denominated in a Foreign Currency

• Interest Rate Risk: Minimum 30% in fixed rate and maximum 70% in variable rate.

• Economic variable projections and risk scenarios

Risk Policy Committee

Office of Risk Analysis and control

Risk Committee

Liabilities

Debt and Risk Control Policies

Risk Policy Committee

Establishes Guidelines and Policies

Risk Committee

Defines and Approves the operational guidelines for the implementation of risk

control strategies

Office of Risk Control

Updates and monitors the guidelines and methodologies for the control of the liability

portfolio

Directorate of Public Credit

Administers the debt portfolio, distributes the resources and manages

the risks

Interest Rates

Maximum 70% in variable rate and minimum 30% in

fixed rate.

Maximum amortization per year should be 15% of

total debt with a deviation up to 18% — Minimum

average life of 4.15 years

Liquidity

Maximum of 20% of debt with exposure to a foreign

currency

FX

Organizational Structure

Risk Management Guidelines

Debt ProfileOutstanding Debt Payments

(percentage per year)

Source: DDCP - SDH

FX Composition

Interest Composition Type of debt and currency

45,90%52,70%

89,40% 89,30% 85,68% 89,05%

14,32% 10,95%47,30%

54,10%

10,60% 10,70%

2002 2003 2004 2005 2006 2007

Debt in COP Debt in other currencies

18,90% 24,30%34,20% 30,70% 32,17%

48,81%

51,19%67,83%81,10% 75,70% 69,30%65,80%

2002 2003 2004 2005 2006 2007

Fixed Variable

External (COP)32,34%

External with no Hedge10,95%

External with Hedge (COP)

10,15%

Internal (COP)46,57%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Debt Ratios

Total Debt / GDP

• The District strictly monitors the incurrence of indebtedness in

order to match the financing needs resulting from the

implementation of new programs and its future revenues

4,11%3,64%

2,89%

3,29%

2,60%

2,80%

0,00%

0,50%

1,00%

1,50%

2,00%

2,50%

3,00%

3,50%

4,00%

4,50%

5,00%

2002 2003 2004 2005 2006p 2007p