June 2008

1. Republic of Portugal The new OT 2023 The Next Step in the Development of the OT Benchmark Curve June 2008

2. CONTENTS: • Section 1: New issue summary • Section 2: Portugal’s Public Finance Reform Programme • Section 3: Debt management and funding

3. OT issuance in 2008 • € 10 - 12 billion(gross) to be issued throughgovernment bonds (OT) • Two new benchmarks to be launched through syndication • 10yr benchmark already launched in February – OT Jun 2018 • Reopening of OT previously issued • € 4.5 billion (gross) already issued THE NEXT STEP:The new OT October 2023 OT/PGB yield curve A new OT Oct 2023

4. The new benchmark OT 2023 Issue Details OT October 25, 2023 Issuer: Republic of Portugal (AA-/Aa2/AA) Initial size:EUR 3 billion Launch and pricing:TBC Start of book building:TBC Maturity:October 25, 2023 (long first) Joint-Lead Managers:CaixaBI, Citi, HSBC, Lehman Brothers, Morgan Stanley Co-Leads:ABN-AMRO, Barclays, BES, BNP Paribas, BSCH, Calyon, HVB, Deutsche Bank, Goldman Sachs, ING, SG CIB • A new Euro benchmark bond to further complete Portugal’s maturity curve and to provide liquidity for investors • To reach a final size no lower than EUR 6 billion giving enhanced liquidity to the OT yield curve • Under market-making obligations on MTS Portugal and EuroMTS • To be admitted as a benchmark issue by Tradeweb and Bondvision 4

5. CONTENTS: • Section 1: New issue summary • Section 2: Portugal’s Public Finance Reform Programme • Section 3: Debt management and funding

6. Portuguese public finance reform programme • A stable political and social environment • The two main political parties have the backing of roughly 80% of the Portuguese voters and share the objective of budgetary consolidation • A government with absolute majority in the Parliament since February 2005 • A new President of the Republic was elected in January 2006 • There will be no elections until 2009 for Central and Local Government and 2011 for the Presidency • A high degree of social consensus

7. Portugal’s public finance reform programme • The Portuguese government has astrong mandate toput public finances on a sustainable footing • The Stability and Growth Programme (SGP), 2007 - 2011 (December 2007) includesa comprehensive set of measures consistent with a correction of the prevailing deficit and a progress towards the medium-term objective, includingthe following: • Central Government restructuring • Reform of the social security and health systems • Improvement in the use of public resources • Strengthen the tax system’s effectiveness • 2008 Budget Law approved by the Parliament reaffirms the Government’s commitmentsand objectives included in the SGP

8. The Stability and Growth Programme • Public finances in the medium-term: SGP 2007-2011 • Government committed to reduce budget deficit over the coming years • Deficit reduction based on structural measures rather than on one-off and temporary measures • Between 2005 and 2007 the deficit was reduced from 6.1% to 2.6% of GDP • In 2008 the deficit is expected to achieve 2.2% of GDP

9. The Stability and Growth Programme • Public finances in the medium-term: SGP 2007-2011 • The performance in 2007 allowed the Government to attain the Stability and Growth Pact’s reference value, one year ahead of schedule • “Portugal is to be praised for bringing its deficit to 3%, and possibly less, in 2007, one year before the deadline. The recent pension reforms also significantly improve the long-term outlook of its finances. It is encouraged to pursue its budgetary strategy to help put the Portuguese economy back on a sustainable and dynamic catching-up path.” – Recommendation from the EC on February 13th, 2008 9

10. Portuguese economy on recovery path Harmonized CPI Real GDP growth Source: National Statistics Office and Budgetary Guidelines Report (May, 2008) Source: Bank of Portugal Economic Sentiment Indicator Monthly Coincident Indicator Source: Bank of Portugal Source: Bank of Portugal 10

11. Structural reforms… • Measures to reduce public expenditure • Reforming the Public Administration • Reorganisation of the State’s local services (PRACE) • Development of shared services • Keeping staff costs growth under strict control • New rules and guidelines to improve human resources management • Promotion of the sustainability of the social security system, through fundamental changes on the applicable rules, in line with major demographic trends

12. Structural reforms… • Measures to reduce public expenditure • Improving the use of public resources • Streamlining of the fundamental public services (education, healthcare, justice and local Government), including the harmonization of public health protection systems in line with the private sector regime • Efficient allocation of public real-estate

13. … underpinning fiscal consolidation • Some measures already implemented to increase tax revenue • Fight against tax fraud and evasion and abusive tax planning • Use of information as a lever in the fight against fraud and tax evasion shall continue to be stimulated • The dissuasive effect resultant from the new debt recovery instruments and mechanisms, and the significant worsening of sanctions for non-compliance with tax obligations, in addition to the revenue achieved, has been the greatest benefit of these actions • Reduction of tax benefits and exemptions

14. Supported by an important privatisation programme • At least 80% of the revenues will be used to reduce the outstanding government debt, thus reducing the borrowing needs • Expected privatisation revenues 2007 2008 2009 2010 2011 Privatisation revenues % GDP 0.5 0.4 0.3 0.2 0.1 Source: SGP (December, 2007)

15. Portuguese fiscal foundations • Portugal has a lower debt burden than euro area average and better than “core” Europe and other rating peers General government gross debt - 2007 Source: Eurostat

16. CONTENTS: • Section 1: New issue summary • Section 2: Portuguese Public Finance Reform Programme • Section 3: Debt management and funding

17. The most important driving factor: The main pillars: • Predictability • Transparency • Accountability Liquidity A market driven borrowing strategy • Aiming at building up a Portuguese benchmark yield curve • Size • Tradability – Efficient and standard market conditions A market oriented borrowing strategy • Priority to the development of a government benchmark yield curve Active debt management - derivatives and buy-backs • Interest rate and refinancing risk management

18. OT issuance process • OT launched through syndication… • Building up an international and diversified investor base • Benchmark size: € 3 billion • Allowing the benchmark OT to be traded in MTS Portugal with quoting obligations from start …and increased through auctions up to € 6 billion • OT syndication process • PD are the only underwriters • PD committed to place bonds in high quality investors • IGCP is the active manager • E-book building

19. An efficient and liquid secondary market Participants in MEDIP/MTS Portugal OT secondary market driven by MTS Portugal ABN Amro Bank Banco Espírito Santo Banco Santander Central Hispano Barclays Bank PLC Bayerische Hypo-und Vereinsbank, AG BNP Paribas Caixa - Banco de Investimento, S.A. CALYON Citigroup Global Markets Deutsche Bank Goldman Sachs International HSBC France ING Lehman Brothers International Morgan Stanley & Co International Société Générale Dresdner Bank Fortis Bank • All OT listed in Lisbon on MEDIP/MTS Portugal • In parallel quotation with EuroMTS • MEDIP/MTS Portugal a regulated “local” market • Driven by market-making obligations from Primary Dealers • Market-making obligations in line with other MTS platforms • Prices spreading over other market segments • Trading spreads within a narrow range and similar to market peers • Settlement through Euroclear/Clearstream • Prices disclosed in real-time to non participants: Reuters PT/MTS1and Bloomberg • Daily turnover, reference prices and a daily fixing in www.mtsportugal.com 16 OEVT/ Primary Dealers 18 Market Makers Bank of America Securities Limited CCCAM CECA Commerzbank AG Credit Suisse JP Morgan Securities Landesbank B-W Mitsubishi UFJ Securities Int. plc Natixis Nomura International WestLB 12 Market Dealers

20. An efficient and liquid secondary market (as of May 29, 2008) • 5-year bid-offer spreads • 10-year bid-offer spreads • 15-year bid-offer spreads • 30-year bid-offer spreads

21. An efficient and liquid secondary market • OT Daily average turnover in MTS Portugal and EuroMTS • Very liquid wholesale cash and repo segments • MTSP OT daily average turnover in • 2006 : € 446 million • 2007 : € 627 million • January-May,23 2008: € 130 million • A last resort repo window provided by IGCP to all market makers in MTSP • OT Repo Market Daily Average Turnover

22. Highly internationalised and diversified OT market • Around 85% of the turnover* in the OT secondary market is generated by non-domestic investors *Turnover with final investors reported by PD (excluding intra-PD trading) - 2007

23. Tel: +351 21 792 33 00 Fax: +351 21 799 37 95 E-mail:info@igcp.pt Web site: igcp.pt Reuters pages: IGCP01 Bloomberg pages: IGCP IGCP: Further information on the Portuguese economy can be obtained from: Further information on the Portuguese secondary market can be obtained from: Budget Department National Statistics Office Banco de Portugal (Central bank) www.dgo.pt www.ine.pt www.bportugal.pt www.mtsportugal.com Reuters pages: PT/MTS1 MTS Portugal: DISCLAIMER The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document are published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise or judgment by a recipient and, therefore, does not form the basis of any contract or commitment whatsoever. IGCP does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents.