IBERSOL Annual Report and Consolidated Accounts 2017

ANNUAL REPORT 2017 pected to reach 1.76 million barrels, below the Government’s expected value (1.82 million barrels), in spite of the recovery of the average price per barrel (USD 51.2 in the first 11 months of 2017 vs USD 40.2 over the same period of 2016). During the second half of the year the need for greater restrictiveness in BNA’s exchange rate policy and the acceleration of the inflation rate led to a new slowdown in economic activity. Given the strong dependence of tax revenue on the evolution of the price of Brent in international markets, public finances have been affected, re- sulting in a contraction of public investment, which was the main driving force in economic development. Between 2013 and 2017, oil revenues measured in USD fell 75% (58% up to 2016). The diversification of the economy, with special emphasis on agri- culture and industry, continues to be the key priority for the sustainability of the country’s economy. After having reached the value of 42% at the end of 2016, the rate of infla- tion recently reversed its downward trend initiated in 2017. Until August, the annual rate of inflation had fallen 15 p.p. to 27%. However, in Septem- ber, year-on-year inflation increased once again and October data points to a rate of 29%. Considering the Government’s intention to make adjustments to the ex- change rate, it is possible that the inflation ratewill remain under pressure. Revenues from oil exports will evolve positively in 2018, with an estima- ted oil production of 1.65 million barrels per day and an average price of close to 60 USD per barrel. 29