5. Allocation Report

The allocation report includes the expenditures effected to the total Green portfolio certified by CBI in 2019, 2020 and 2021, as well as the social projects described in the Sustainable Framework and detailed below in the Social Bonds section. This document reports the execution between January, 2018 and December, 2021.

Following the methodology used in the last reports, the bonds will follow a distribution according to its ESG characteristic and the year of issuance. Thus, this document reports the allocation of the 2019, 2010 and 2021 Green Bonds; 2020 and 2021 Social Bonds and 2021 Sustainable bonds.

For the assignation of the expenditures, to the amount informed in the previous reports (2020 Allocation Report), it is added the new expenditures, in equal parts between each group of bonds. For these purposes, the expenditures incurred in each year will be allocated in equal parts to each group.[2]

a) Green Bonds

The information of this report was provided by the different Ministries. Due to the Budgetary purposes of the information, and considering the annual character of the Budget Law, the information is provided annually.
In aggregated terms, of the US$7,584 million issued in Green Bonds, US$325 were disbursed in 2018, US$266 in 2019 and US$346 in 2020, and US$288 in 2021, totaling US$1,255 million for the financing of Green Bonds.

According to this methodology, 2019 Green Bonds reached a total disbursed of 30.6%, of which 13.7% correspond to refinancing and 16.9% to financing. It is important to highlight that the percentage of execution varies for each  project. For example, renewable energy or management of water projects were fully executed in only 1 year, but in the case of the construction or extension of metro lines railroads, the execution could last 5 years or more (see Figure 1).

In the case of 2020 Green Bonds, they reached 10.2%, of which 3.4% were oriented to refinancing and 6.8% to financing. At the same time, it has been assigned 7.5% of the total amount issued in 2021 Green Bonds, of which 0.1% corresponds to refinancing and 7.5% to financing. Figure 1 shows a summary of the expenditures, the amounts pending to execute and the progress status for each of the 3 groups of Green Bonds.
Considering the total amount issued in Green Bonds, and the total committed to disburse, there are still US$6,359 million to execute. Figure 2 shows the pending amounts to disburse in each green sector, as well as an estimated timeline for their execution. As mentioned, projects related to water management and renewable energies are fully executed. In the case of clean transportation, there is still 87% to disburse, due to the characteristic of these projects.

According to the established in the Framework, and in order to avoid delays or reallocation in green projects, the certified portfolio reaches US$9,660 million, higher than the total amount issued in 2019, 2020 and 2021. In effect, the portfolio has suffered minor changes in comparison to the initial projection.

Considering the financial projections, it is expected to fully assign the expenditures in 6 years, for each group of bonds. In line with the established in the Framework, until the full allocation green expenditures into the associated Green Bonds, the Ministry of Finance and the Budget Office, as appropriate, will manage the funds according to the State Financial Management Law (Ley de Administracion Financiera del Estado) and the other applicable Law.

Table 4 shows a summary of the allocation per year of each Project included in the 2019, 2020 and 2021 green portfolio. The detail could be found in the corresponding notes.

1. Electromobility projects in metropolitan mobility system (RED)

The progress, re-financing and co-financing per stage is show in Table 5.

2. Sustainable Public Buildings

Below is the list of buildings included and their status.

3. Analysis and Conservation of Water Resources

The following Table includes the original list of included projects and their status.

b) Social Bonds

The Allocation Report considers disbursements associated with social bonds issued between 2020 and 2021. Thus, it accounts for the disbursements made in social projects, executed from January 1, 2020 to December 31, 2021.

The data for the preparation of this report was mainly obtained from the Budget Office and the General Treasury of the Republic. Considering that the information is produced for budgetary purposes and the Budget Law is annual, the information is provided annually.

Based on the social bonds mentioned in Section II and the average exchange rate, the total amounts of social bonds issued per year, by currency, are as follows.

For the allocation of social expenditures, social expenses incurred in 2020 are allocated as financing for the bonds issued in 2020 (2020 Social Bonds), and as refinancing of the bonds issued in 2021 (2021 Social Bonds). Expenditures incurred in 2021 are considered financing in the case of the 2021 Social Bonds.

In aggregate terms, out of US$17,889 million raised in social bonds, US$10,564 million were disbursed in 2020 and US$7,390 million in 2021, totaling 100% of the amount issued in social bonds.[3]

For the 2020 Social Bonds, 100% of the proceeds has been disbursed, equivalent to US$2,020 million. This amount is reported as financing.  
In the case of 2021 Social Bonds, these also reached 100% of disbursement, of which 53%, or US$8,479 million corresponds to refinancing, and 47%, or US$7,390 million, to financing. Figure 3 presents the detail of expenditures.

Social Sectors

Regarding the sectors in which the disbursements were made, they are concentrated in the programs to prevent and/or alleviate unemployment, which totaled 32% for both years, and in the item Support for the Elderly People or People with Special Needs, which totaled 31%. This is due to the importance of the support derived from the situation produced by COVID, as well as the importance of the effect of pensions in the country. Figure 4 presents a breakdown of the expenditures considered.

Regarding the specific disbursement in each project, Table 9 presents a summary of the disbursement per year for each social sector included in the 2020 and 2021 Social Bonds[5].

c. Sustainable Bonds

For the allocation of expenses in the case of the Sustainable Bond issued in 2021, 10% of its amount is allocated to green items, and 90% to social items. In the case of the social items, this 90%, corresponding to US$1,349 million, has been accounted as financing. On the other hand, the green portion to be financed reaches US$ 150 million.
Following the methodology described at the beginning of this section, US$ 1,349 million were allocated to the total portion, completing all the commitments in social expenditures attributable to Sustainable Bonds; US$ 97 million were allocated to the green portion, reaching 65% of the amount to be financed. Thus, the total allocation in sustainable bonds reached 96% of the commitment.

Figure 5 shows the total amount to be financed and the amount financed for both the social and green portion of the 2021 Sustainable Bond.