URBAN AGE

CITY TRANSFORMATIONS CONFERENCE

October 2013

Eduarda la Rocque

Institute Pereira Passos; City of Rio de Janeiro, 2009–2012

Extracting value from economic growth: the Rio perspective

All rights are reserved by the presenterwww.lsecities.net

Brazil

R I O D E J A N E I R O C I T Y H A L L | P E R E I R A P A S S O S I N S T I T U T E

and Rio de Janeiro

BRAZIL AND RIO DE JANEIRO

• Population: 193 Mn

(5th largest)

• GDP: US$ 2.22 Tn

(2012)

(6th economy in the

world – expected to be

5th by 2016)

• GDP per capita

US$ 12,100 (2012)

• Growing Middle

Class – now represents

53% of population

• Investment Grade as

of 2008

• Population: 16,3 Mn (2013e)

• GDP: US$ 177 Bn (2009)

• GDP per capita: US$ 11.190 (2009)

• GDP per capita (2010)*: US$ 14.458

• Investment Grade as of March 2010

1st state in Brazil

• Expected investments of US $384 Bn

between 2011 – 2014

* 2009 figures adjusted by country’s nominal

GDP growth rate

City of Rio de Janeiro

• Population: 6.42 Mn

(41% between 15 and 39 years) (2010)

• 2nd largest city in Brazil and 3rd in Latam

• GDP: US$ 88 Bn (2010)

• GDP per capita: US$ 14.000 (2010)

• 49% of State’s economy

85% service related

• Education HDI: 0.933 (Comparable to Israel and Portugal)

• Investment Grade as of December 2010, upgraded in

December 2011

State of Rio de Janeiro

RIO DE JANEIRO

Brazil

BRAZIL

R I O D E J A N E I R O C I T Y H A L L | P E R E I R A P A S S O S I N S T I T U T E

ECONOMIC INDICATORS

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

The City has strong economic indicators, being responsible for both 49% of the State’s GDP

(USD 177 bi) and ¼ of the FDI in the country

¹Purchasing Power Parity ; Sources: IBGE,World Bank , PME, CAGED, LRF Research

Rio vs. BRICs (2010 Per Capita GDP USD ppp¹)

19,840

Russia

19,073

City of Rio

11,127

Brazil

7,536

China

3,586

India

RIO MOMENTUM

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

Global Events

2010 2011 2012 2013 2014 2015 2016

© Rio Business: Official Agency of Rio de Janeiro City Hall, responsible for attracting and facilitating inward investments

CITY OF RIO - ACHIEVEMENTS TO DATE

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

• Project Management Office

• Implementation of a performance-base model >MERITOCRACY

Strategic Planning >Thinking Rio in 2020

www.rio.rj.gov.br

• Improving Business Environment

•Comprehensive program to reduce bureaucracy

• Formalization of business and attraction of investors

• New Investment Agency: www.rio-negocios.com

CITY OF RIO - ACHIEVEMENTS TO DATE

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

* Fiscal Transparency Report available at http://www.rio.rj.gov.br/web/smf

� INVESTMENT GRADE – MOODY’S (BAA2) AND FITCH (BBB)

Only municipality with the same rating as Brazil’s

� FISCAL RESPONSIBILITY AND TRANSPARENCY (*)

Increase in Total Revenues

• US$ 5.8 Bn in 2009 to US$ 9.2 Bn in 2012 (58% increase, CAGR 16,7%)

• Improvement in Collection Systems (“Nota Carioca” Program)

US$ 1 Bn World Bank Loan

• Estimated gains of US$ 1.25 Bn in a total debt of US$ 5Bn

• Expanding Rio de Janeiro’s investment capacity: US$ 186 Mn in 2009 budget to

US$ 1,5 Bn in 2011

New Focus: Sustainability

• Fiscal, Economic, Social and Environment

Fiscal Adjustment

EXPANDING INVESTMENT CAPACITY OF RIO

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

20122009

Fiscal Adjustment

Staff

58%

Debt Interest

6%

Other Current

Expenses

28%

Investments

4%

Debt Repayment

4%

Staff

46%

Debt Interest

2%

Other Current

Expenses

35%

Investments

16%

Debt

Repayment

1%

INVESTMENT CAPACITY OF RIO – 2005/2012

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

In US$ Millions

Source: City Hall

2005 259.2 3,637.67 7.1%

2006 317.49 3,875.35 8.2%

2007 405.95 4,486.98 9.0%

2008 392.23 5,186.51 7.6%

2009 186.37 5,009.30 3.7%

2010 725.63 6,640.93 10.9%

2011 1,556.84 8,708.37 17.9%

YEARINVESTMENTS

[A]

TOTAL

EXPENDITURES

[B]

%

[A]/[B]

2012 1,545.12 9,697.67 15.9%

Fiscal Adjustment

50% OF BRAZILIAN STOCK MARKET CAP IS

HEADQUARTERED IN RIO

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

PRIVATE & PUBLIC INVESTMENT IN THE STATE

(THROUGH 2020)

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

STRATEGIC SECTORS

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

ENERGY

HIGH TECH

CREATIVE INDUSTRY

HOSPITALITY

FINANCE TELECOM

50% OF BRAZILIAN STOCK MARKET CAP IS

HEADQUARTERED IN RIO

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

www.cidadeolimpica.com

• Revitalization of the Sea Port Area

• 4 Olympic areas re-qualified, with full accessibility

• Construction of Parque Olímpico in Barra

• Construction of an Olympic Training Centre (400 athletes/day)

• At least 40% growth in hotels availability

INFRASTRUCTURE & URBANIZATION

• Morar Carioca: all the favelas re-urbanized until 2020 (1,4 million people)

• English teaching in the 1064 municipal schools (530k students)

• Practice of sports spread in the whole public schools system

SOCIAL AND ECONOMIC DEVELOPMENT

• Implemented new intermodal system linking in the express ways (BRTS), trains, ferry and subway (150Km)

• Increase of high capacity transportation from 18% to 63%

• Duplication of the City bike tracks to 300km

TRANSPORTATION

• Recovery of the lagoon systems of Barra and Jacarepaguá

• Reforestation of more than 1.300 ha

• More than 700 thousand people with acessto sewage (West Zone)

• Reduction of 16% on gas emissions by 2016

• Full Operation of a new Waste Facility in Seropédica

ENVIRONMENT

Sustainability and Legacy

OLYMPIC GAMES

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

• A great opportunity to consolidate Rio´s turnaround

• 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”

• Olympic venues are being financed mainly through partnerships with private

investments

RIO’S PERSPECTIVES - FINANCIAL MARKETS

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

”

Public-Private Partnership – “Grupo Financeiro Carioca”

•Rio Investors Day (reintroducing Rio in the global financial calendar)

• Attracting new players: PIMCO and Direct Edge

• Headquarters of Major Independent Asset Managers, Brokerage and Private

Equity Firms

Financial Center at the Seaport Area

• Offices, Hotels, Convention Centers, Universities, Back-office and Asset

Management Firms, Insurers and Reinsurers

SECURITY POLICY

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

Security problem is being tackled by the State Government

• Partnership between Federal, State and Municipal Government is helping

to build a new city with different perspectives and alternatives

UPP (Peacemaker Police Units) initiatives - www.upprj.com

• Local communities free of drug dealers and “milícias”

• 34 UPP’s already operative: Santa Marta, Cidade de Deus, Jardim Batam,

Chapéu Mangueira e Babilônia, Cantagalo e Pavão-Pavãozinho, Morro dos

Cabritos e Tabajaras, Providência, Borel, Formiga, Andaraí, Turano,

Salgueiro, Macacos, Complexo do Catumbi/Santa Teresa, São Carlos,

Magueira/Tuiuti, Rocinha…

• Police occupation leads to businesses formalization and economic

development

• A total of 45 should be implemented until 2014

SUSTAINABILITY

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

� Financial Markets as a promoting agent of Economic, Social and

Environmental sustainability

� New Global Economy requires alignment:

• between public power levels

• between public and private sectors (PPPs)

• between public and and third sector (PPP3)

� It´s time to bring together finance modelling and market economy to

the public and third sector in order to achieve economically, socially

and environmentally sustainable development

•BVRio

• Pacification UPP Social Civil Society

RIO’S PERSPECTIVES - FINANCIAL MARKETS

P R E F E I T U R A D A C I D A D E D O R I O D E J A N E I R O | I N S T I T U T O P E R E I R A P A S S O S

BVRio (Bolsa Verde do Rio –

Green Assets Exchange)

A non profit organization in

line with the goal of economic

development with

environmental sustainability Enviromental Assets Operations

Guanabara Effuents (MEG)

Carbon Emissions

EnviromentalCompensations

Waste RecoveryAnd Recycling

Reflorestation

Others

Registry• of assets

• of trades

Trading Platform

EXECUTIVE BOARD

C E O

Objectives:

• Foster market mechanisms to ease

implementing environmental

regulatory requirements

• Contribute to the development of

the Green Economy in Rio de

Janeiro and Brazil

• Place Rio de Janeiro at the

forefront of the Environmental

Economics

BV Rio - Board of Directors

Board of DirectorsComposed of four Chambers – up to 4 members per chamber

BusinessChamber

Third Sector and Academy

Chamber

CitizensChamber

GovernmentChamber

Pedro Moura Costa

Sergio Besserman

Thank You!

Eduarda Cunha de La Rocque

Instituto Pereira Passos

Tel: +55 21 29766453

erocque.ipprio@gmail.com