PERÚ One of the Most Attractive Investment Destinations

Luis M. Valdivieso President of the Private Pension Fund Administrators Asociation (AAFP)

Director inPERÚ London, April 2012

I. What makes Peru attractive for investment?

II. Market perception and the investors’ response to such investment environment

III. Areas in need of improvement

IV. Risks and mitigating factors

2

I. What makes Peru attractive for investment?

3

84.0%

54.0% 48.5% 45.5%

22.8%

0.0

0.5

1.0

1.5

2.0

2.5

Turk

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Ang

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Mya

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Moz

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Trin

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Phi

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Luxe

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Ant

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Nic

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Guy

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Sam

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Sey

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Sw

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St.

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Mad

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Mex

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Finl

and

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Dom

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Nor

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Gre

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Cen

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Net

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Ger

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Italy

1. Peru has recorded one of the strongest growth performances in the last decade

Cumulative GDP Growth 2002-2011 (in percent)

Source: Word Economic Outlook Set. 2011 The year 2012 is a proyection 4

Per Capita GDP Growth* (Number of times)

2011/1980

2011/1990

2011/2000

1 Chile 5.72 Chile 3.36 Peru 1.97

2 Uruguay 4.51 Argentina 3.10 Uruguay 1.90

3 Colombia 4.16 Peru 3.08 Argentina 1.89

4 Argentina 3.58 Uruguay 2.92 Ecuador 1.76

5 Peru 3.37 Colombia 2.36 Colombia 1.73

6 Ecuador 3.23 Ecuador 2.26 Chile 1.70

7 Brazil 3.16 Brazil 2.22 Paraguay 1.66

8 Mexico 3.04 Bolivia 2.14 Brazil 1.64

9 Paraguay 2.89 Mexico 2.06 Bolivia 1.56

10 Bolivia 2.51 Paraguay 1.87 Venezuela 1.45

11 Venezuela 2.25 Venezuela 1.77 Mexico 1.39

*Based on Purchasing Power Parity. Current per capita GDP is compared to 1980, 1990 and 2000.

5.8

4.9 4.5 4.3 4.2 4.0 4.0

3.7 3.6 3.4

1.9

Pe

ru

Arg

entin

a

Ecu

ad

or

Pa

raguay

Colo

mbia

Chile

Bo

livia

Uru

guay

Bra

zil

Ve

nezuela

Me

xic

o

Latin American: Average GDP Growth 2001-2011 (Real % Change)

Source: WEO-IMF, Sep-2011

Growth has been driven by rising investment and labor productivity and supportive investors and consumers’ confidence

1.2 1.2

3.5

1.6

0.5

2.3

1.5

0.5

0.9 0.9

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Peru Colombia Chile Brazil Mexico

1995-1999

2000-2009

5

Optimist Trend

Pesimist Trend

Consumer Confidence Index Family Economic Situation

Investment Expectations 6 months

Investment rises

Investment falls

Source: Central Bank of Perú Source: Central Bank of Perú

Inversión Bruta Fija: 2004-2011 (En porcentaje del PBI)

Source: Central Bank of Perú, Ministry of Economy and Finance

2.8 2.9 3.1 3.4 4.3 5.2 5.9 4.5

15.1 15.5 16.4 18.2

21.5 17.7 19.2

19.6

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011

Private Investment Public Investment

2. Peru’s growth potential is very promising

Countries that will grow on average above 6 per cent per annum in 2012-2013

Source: IMF – WEO 2011, except for Peru which is based on official government projections base.

6

____________________ Source: MEF, BCRP, MINEN, and media

7

…total investment is expected to reach new highs, with very auspicious private investment plans for 2011-2016

2.8 2.9 3.1 3.4 4.3 5.2 5.9 4.5 5.8 5.8

15.1 15.5 16.4 18.2

21.5 17.7

19.2 19.6

19.9 20.3

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross National Investment: 2004-2013 (% GDP)

Private Investment Public Investment

Source: Central Bank of Perú, Ministry

3. Peru has recorded the lowest inflation in LA in the last decade and is expected to keep it well under control

8

23.4

10.9 9.0 7.9 6.6 5.6 5.2 5.1 4.4 3.2 2.5

0

5

10

15

20

25

Ven

ezu

ela

Arg

enti

na

Uru

guay

Par

agu

ay

Bra

zil

Bo

livia

Ecu

ado

r

Co

lom

bia

Mex

ico

Ch

ile

Pe

ru

Consumer Prices Inflation (Average annual rate 2001-2011)

Source: WEO Database - IMF Annual percentage of average consumer prices are year-on-year changes

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Argentina Bolivia Brazil Chile Colombia Peru

Source: BCRP

4. Peru’s current account is sustained by sizable long-term private capital inflows, but its trade account is sensitive to commodity price volatility and changes in external demand

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (*) 2013 (*)

-1.5

0.0

1.4

3.1

1.1

-3.7

0.2

-1.7-1.3 -1.5 -1.8

3.00 3.304.10

4.50

9.10

7.50

6.05

7.99

6.45

4.745.59

Current Account Balance and Long Term Private Financing: 2003 – 2013 (% of GDP)

Trade Balance and Terms of Trade (US$ billions and index 1994=100)

0.9

3.0

5.3

9.08.5

2.6

6.06.7

9.3 9.1 10.0

0

20

40

60

80

100

120

140

160

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (*) 2013 (*)

9

To control the impact of price volatility on the exchange market, the Central Bank has intervened occasionally without countering underlying market forces

80

90

100

110

120

130

140

150

Dec

-07

Feb

-08

Ap

r-08

Jun

-08

Au

g-0

8

Oct

-08

Dec

-08

Feb

-09

Ap

r-09

Jun

-09

Au

g-0

9

Oct

-09

Dec

-09

Feb

-10

Ap

r-10

Jun

-10

Au

g-1

0

Oct

-10

Dec

-10

Feb

-11

Exchange Rate Index (December 2007=100)

Brasil Chile Peru Colombia Mexico

12/07 2/12

Net International Reserves and Foreign Exchange Position

(US$ billion)

11

NIR/Short-term external debt 6.5

NIR/ Liquidity (%) 92.9

NIR / GDP (%) 30.3

13 14 9 10

29

NIR / GDP: 2010 (in %) 4.6

1.0 2.3 2.9

5.6 NIR / Short–term external debt: 2010 (Number of times)

In the process, Peru has built a very strong external position, enhancing its ability to confront external shocks

12

Overall Balance of the Non-Financial Public Sector (In percent of GDP)

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-2.3 -1.7

-1.1

-0.3

2.2

3.1

2.1

-1.9

-0.3

1.0 1.1 1.4

Surplus

Deficit

44.3

37.7

33 29.7

24.1 27.1

23.4 21.7 19.9 18.3

36.1

30.1

24.1

17.8

12.5 14.2 11.5

8.2 6.1

4.1

2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013*

Gross Debt Net Debt

*Forecast

5. Peru has demonstrated its commitment to fiscal discipline and a prudent public debt management

Public Sector Debt (% of GDP)

Brazil Chile Colombia Mexico Peru

64.98

10.49

35.92

42.90

21.52

General Government Gross Debt (%GDP) - 2011

64.981

10.49

35.918

42.897

21.518

0

10

20

30

40

50

60

70

80

90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%

General Government Gross Debt (% GDP) - 2011

Brazil Chile Colombia Mexico Peru

Debt indicators are quite favorable

6. The Central bank has kept inflation under control through timely actions, while supporting economic activity

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0

ene-0

6

mar-0

6

may-0

6

jul-06

sep-0

6

nov-0

6

ene-0

7

mar-0

7

may-0

7

jul-07

sep-0

7

nov-0

7

ene-0

8

mar-0

8

may-0

8

jul-08

sep-0

8

nov-0

8

ene-0

9

mar-0

9

may-0

9

jul-09

sep-0

9

nov-0

9

ene-1

0

mar-1

0

may-1

0

jul-10

sep-1

0

nov-1

0

ene-1

1

mar-1

1

may-1

1

jul-11

sep-1

1

nov-1

1

ene-1

2

Tasa de interés de referencia del Banco Central (En porcentaje)

4,25

14,1

25,0

00

05

10

15

20

25

30

35

Ene-

06

May

-06

Sep-

06

Ene-

07

May

-07

Sep-

07

Ene-

08

May

-08

Sep-

08

Ene-

09

May

-09

Sep-

09

Ene-

10

May

-10

Sep-

10

Ene-

11

May

-11

Sep-

11

Ene-

12

Tasa de encaje en moneda nacional (Como % de las obligaciones sujetas al encaje)

Medio Exigible

Marginal

%

38,2

55,0

20

25

30

35

40

45

50

55

60

Ene-

06A

br-0

6Ju

l-06

Oct

-06

Ene-

07A

br-0

7Ju

l-07

Oct

-07

Ene-

08A

br-0

8Ju

l-08

Oct

-08

Ene-

09A

br-0

9Ju

l-09

Oct

-09

Ene-

10A

br-1

0Ju

l-10

Oct

-10

Ene-

11A

br-1

1Ju

l-11

Oct

-11

Ene-

12

Tasa de encaje en moneda extranjera(Como % de las obligaciones sujetas al encaje)

Medio Exigible

Marginal

%

Central Bank policy rate (%)

Reserve Requirement Ratio: Domestic Currency (% of liabilities subject to reserves)

Reserve Requirement Ratio: Foreign Currency (% of liabilities subject to reserves)

Average Marginal

Average Marginal

…credit to the private sector has increased steadily in real terms

90

95

100

105

110

115

120

125

130

135

140

3Q-08 1Q-09 3Q-09 1Q-10 3Q-10

Credit to the private sector (2008.Q3=100)

Brazil Colombia

Peru 1/ Chile 2/

1/ In Peru includes loans made by banks branches

CRÉDITO AL SECTOR PRIVADO Tasas de variación anual

feb-2011 mar-2011 abr-2011 may-2011 jun-2011 jul-2011 ago-2011 sep-2011 oct-2011 nov-2011 dic-2011 ene-2012 feb-2012

Saldos (millones de S/.) 130 678 132 847 136 335 139 915 141 296 142 917 144 170 145 419 147 276 149 669 152 890 153 784 154 158

Flujos mensuales (millones de S/.) 1 544 2 168 3 488 3 581 1 381 1 621 1 252 1 250 1 857 2 393 3 220 894 374

Variaciones (%) mensuales 1,2 1,7 2,6 2,6 1,0 1,1 0,9 0,9 1,3 1,6 2,2 0,6 0,2

Variaciones anuales (%)

Moneda nacional 21,4 21,3 21,2 21,3 20,7 19,6 19,5 20,2 21,1 20,6 20,4 19,6 19,0

Moneda extranjera 20,1 21,0 23,0 23,9 22,8 21,9 23,9 20,6 17,8 17,1 17,3 18,4 16,7

Total 20,8 21,2 22,0 22,5 21,7 20,6 21,5 20,4 19,6 19,0 19,0 19,1 18,0

11,613,4

14,916,2 17,2 17,3

19,4 20,2 19,9 21,0 20,9 20,8 21,2 22,0 22,5 21,7 20,6 21,5 20,4 19,6 19,0 19,0 19,1 18,0

mar10 abr10 may10 jun10 jul10 ago10 sep10 oct10 nov10 dic10 ene11 feb11 mar11 abr11 may11 jun11 jul11 ago11 sep11 oct11 nov11 dic11 ene12 feb12

Growth in Credit to the Private Sector (in percent)

Credit Cards per capita (1)

7. Peru’s banking system is still small compared to other Latin American countries

Banking Depth at retail level (Mortgage and Consumption loans/GDP)

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

BRASIL ARGENTINA CHILE MÉXICO PERÚ

1.52

1.15

0.63 0.48

0.35

Bank offices per 100,000 persons

16

Sources: SBS - PERÚ: indicadores de inclusión financiera de los sistemas financiero, de seguros y de pensiones

Sources: FELEBAN – Boletín Económico a Diciembre 2010 Sources: SBS - II Congreso latinoamericano de educación financiera

Banking Depth (Deposits/GDP in %)

17

Non Performing Loans in % of Total Loans

Source: SBS y BCRP.

…but it is quite sound, progressively becoming less dollarized, and it is very well regulated and supervised

73 74 77 79 82 80 79 77 74 71 67 60 57 52 46 44

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Dolarization of credit to the private sector (%)

Dollarization of Credit to the Private Sector and Liquidity (in percent)

Credir Liquidity

-

0.5

1.0

1.5

2.0

2.5

3.0

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

dic

-94

jun

-95

dic

-95

jun

-96

dic

-96

jun

-97

dic

-97

jun

-98

dic

-98

jun

-99

dic

-99

jun

-00

dic

-00

jun

-01

dic

-01

jun

-02

dic

-02

jun

-03

dic

-03

jun

-04

dic

-04

jun

-05

dic

-05

jun

-06

dic

-06

jun

-07

dic

-07

jun

-08

dic

-08

jun

-09

dic

-09

jun

-10

dic

-10

jun

-11

dic

-11

Profitability Indicators

Return on Equity Return on Assets

1.47

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

02

/01

/20

07

02

/02

/20

07

02

/03

/20

07

02

/04

/20

07

02

/05

/20

07

02

/06

/20

07

02

/07

/20

07

02

/08

/20

07

02

/09

/20

07

02

/10

/20

07

02

/11

/20

07

02

/12

/20

07

02

/01

/20

08

02

/02

/20

08

02

/03

/20

08

02

/04

/20

08

02

/05

/20

08

02

/06

/20

08

02

/07

/20

08

02

/08

/20

08

02

/09

/20

08

02

/10

/20

08

02

/11

/20

08

02

/12

/20

08

02

/01

/20

09

02

/02

/20

09

02

/03

/20

09

02

/04

/20

09

02

/05

/20

09

02

/06

/20

09

02

/07

/20

09

02

/08

/20

09

02

/09

/20

09

02

/10

/20

09

02

/11

/20

09

02

/12

/20

09

02

/01

/20

10

02

/02

/20

10

02

/03

/20

10

02

/04

/20

10

02

/05

/20

10

02

/06

/20

10

02

/07

/20

10

02

/08

/20

10

02

/09

/20

10

02

/10

/20

10

02

/11

/20

10

02

/12

/20

10

02

/01

/20

11

02

/02

/20

11

02

/03

/20

11

02

/04

/20

11

02

/05

/20

11

02

/06

/20

11

02

/07

/20

11

02

/08

/20

11

02

/09

/20

11

02

/10

/20

11

02

/11

/20

11

02

/12

/20

11

02

/01

/20

12

02

/02

/20

12

02

/03

/20

12

02

/04

/20

12

IGBVL

ISBVL

Fuente: Superintendencia de Mercado de Valores – Series Estadísticas

0

25,000,000,000

50,000,000,000

75,000,000,000

100,000,000,000

125,000,000,000

150,000,000,000

175,000,000,000

200,000,000,000

225,000,000,000

250,000,000,000

275,000,000,000

300,000,000,000

325,000,000,000

350,000,000,000

375,000,000,000

400,000,000,000en

e-0

2m

ar-0

2

may

-02

jul-

02

sep

-02

no

v-0

2en

e-0

3

mar

-03

may

-03

jul-

03

sep

-03

no

v-0

3en

e-0

4

mar

-04

may

-04

jul-

04

sep

-04

no

v-0

4

ene

-05

mar

-05

may

-05

jul-

05

sep

-05

no

v-0

5

ene

-06

mar

-06

may

-06

jul-

06

sep

-06

no

v-0

6en

e-0

7

mar

-07

may

-07

jul-

07

sep

-07

no

v-0

7

ene

-08

mar

-08

may

-08

jul-

08

sep

-08

no

v-0

8

ene

-09

mar

-09

may

-09

jul-

09

sep

-09

no

v-0

9en

e-1

0

mar

-10

Capitalización Bursátil Capitalization (in Nuevos Soles)

General (IGBVL) and Selected (ISBVL) Indices of the Lima Stock Exchange

8. Peru’s capital market is developing rapidly

EFTA

New Zealand

South Africa ECA Plus

Existing FTA agreements Planned FTA negotiations

Mexico: ECA 8 A P E C

W T O

singapore

European Union

Korea

Japan

Australia

Central America

CARICOM

India

Morocco

Russia Russia

China

Thailand

China

Chile: ECA 38

United States

Canada

MERCOSUR ECA 58

Andean Community

9. Peru has a very open economy

CHILE

CANADA

USA

ANDEAN COMMUNITY MERCOSUR

CHINA

EUROPEAN UNION

EFTA

KOREA

THAILAND MEXICO

PANAMA, COSTA RICA, EL SALVADOR & HONDURAS

NEW ZELAND

AUSTRALIA

MALAYSIA/BRUNEI

JAPAN

VIETNAM

SOUTH AFRICA

INDIA

RUSSIA

TURKEY

MOROCCO

VENEZUELA

Negotiated FTA agreements

Current or recently concluded FTA negotiations

WTO

APEC

PERU

19

Australia China* Korea Malaysia Singapore* Thailand Japan Argentina

Bolivia Chile* Colombia Ecuador Paraguay Venezuela

Cuba El Salvador

Germany Belgium and Luxembourg Denmark Spain Finland France Netherlands Italy Norway Portugal United Kingdom Czech Republic Romania Sweden Switzerland

Canada* United States*

… open trade policy has been complemented with investment agreements

It also has existing agreements to avoid double taxation with Brazil, Chile and Canada and has scheduled negotiations with 14 countries.

* FTA

10. Peru has a stable and predictable legal framework for investment

The State guarantees:

Non discriminatory treatment between national and foreign investors

Unrestricted access to most economic sectors

Free transfer of capital and free access to the most favorable exchange rate available in the market

Free competition

Constitutional Guarantees for Private Property

Freedom to purchase stocks from locals

Freedom to access internal and foreign credit

Freedom to pay and remit royalties and dividends

The State also extends stability agreements 1/ on:

The income tax rules applicable to dividends.

The right of recruitment regimes.

The regimes for the promotion of exports.

The Income Tax Regime,

The State also offers a special regime on the value added tax, which allows for a tax reimbursement during the pre=production stage of the project (minimum 2-year term).

Peru is adherent to the OECD Declaration on International Investment and Multinational Enterprises and a member of the ICSID and MIGA

Source:s: Constitutional provisions, “Law for the Promotion of Foreign Investment”, Legislative Decree N° 662, “Framework Law for Private Investment Growth”, Legislative Decree N° 757, “Law for the Promotion of Private Investment in Infrastructure and Public Service Works”, Approved by Supreme Decree N° 059-96-PCM

1/ For FDI of at least US$ 5 MM in any economic sectors, except for hydrocarbon and mining sectors where the minimum is US$10 MM.

21

II. Market perceptions and investors’ response

22

Rating agencies granted an investment grade to Peru in 2008

Source: Bloomberg, March 2012

PAIS S&P FITCH MOODY'S

Chile A+ A+ Aa3

México BBB BBB Baa1

Brasil BBB BBB Baa2

Perú BBB BBB Baa3

Colombia BBB- BBB- Baa3

Bolivia B+ B+ B1

Venezuela B+ B+ B2

Argentina Bu B B3

Ecuador B- B- Caa2

23

Various surveys indicate that Peru is perceived as one among the best countries in the region for investment

5.7

5.7

5.8

5.8

5.8

5.9

6.1

6.1

6.2

6.2

6.2

6.4

6.5

6.6

6.7

Sweden

Bahrain

Korea,Rep

Israel

Slovak Republic

Canada

Japan

Chile

Panama

Philipphines

China

Singapore

Malaysa

Thailand

Peru

Aggregate macroprudential indicator*

*This is the aggregate measure of macroeconomic soundness

based on real GDP growth, deposit interest rate, inflation volatility, and inflation level Source: WEF - Financial Development Report 2011

Rank

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

3.1

3.2

4.0

4.1

4.2

4.2

4.5

4.6

4.8

5.5

5.6

5.8

Argentina

Venezuela

Guatemala

Mexico

Brazil

Dominic. Rep.

Bolivia

El Salvador

Uruguay

Chile

Colombia

Peru

Government Readiness for private investment in infraestructure

Source: WEF - Fi El Benchmarking National Attractiveness for Private Investment in Latin american infraestructure 2007

1

2

3

4

5

6

7

8

9

10

11

12

Rank

24

Perú18%

Uruguay, 2%

Argentina8%

Brasil,41%

Chile13%

Colombia14%

México,2%

Paraguay1%

Otros1%

Source: PWC 2010. (200 CEOs in LA survey)

25

PERU: Ranking on the ease of doing business 2006-2011

Ranking improvement 2006-2011

0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 2010 2011 2012

78

65 53

65

46 39 41

-30

-20

-10

0

10

20

30

4037

34

18

9

-4

-15 -20

0 20 40 60 80 100 120

Enforcing Contracts

Resolving Insolvency

Getting Electricity

Starting a Business

Getting Credit

Protecting Investors

111 101 100

85 82

56 55

41 24 22

17

0

20

40

60

80

100

120

140

160

Peru Chile Mexico Brazil Colombia

Peru has been escalating rapidly the ranks of the Doing Business Survey

The market for long-term sovereign bond has also been signaling a perceived lower country risk

12.3 12.9

5.6

6.8

7.8 8.2 8.3 8.3

3.55 4.2

4.64 5.45

5.96 6.21 6.28 6.46

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

5 10 15 20 25 30 35 40

Yiel

d (

%)

Time to maturity (years)

Peruvian Tresasury Bond's Yield Curve

Jun 2001

May 2006

Feb 2012

26

Source: PROINVERSIÓN

FDI'S STOCK IN PERU(US$ million)

FDI'S STOCK PER COUNTRY (%()

…it is therefore not surprising that Peru keeps attracting large FDI inflows

27

0

5,000

10,000

15,000

20,000

25,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

MINERÍA 26%

FINANZAS 20%

COMUNICACIONES 18%

INDUSTRIA 15%

ENERGÍA 14%

COMERCIO 4%

OTROS 3%

FDI'S STOCK BY SECTOR

ESPAÑA 20%

REINO UNIDO 20%

EE.UU. 14%

PAÍSES BAJOS 7%

CHILE 6%

COLOMBIA 5%

BRASIL 5%

OTROS 23%

Several multinational companies are now

operating in Peru

Shougang Corp Sapet Marubeni Honda SK LS Nikko Sumitomo Matsushita P&O Dover China Fishery Group Chinalco Zijin Mining Nippon Mining Mitsui Mining

Teck Cominco Quebecor Barrick Scotiabank

Firth Ind. Newcrest BHP Chariot Amcor Downing Teal Orica Rio Tinto

Grupo Slim Grupo Mexico Grupo Bimbo Zeta Gas Minas Peñoles Banco Azteca Elektra Café Britt

Techint Pluspetrol Odebrecht Petrobras AmBev Gerdau Votorantim Vale Grupo ISA Falabella Ripley CENCOSUD ENAP LAN

• Hunt Oil • Nextel • Citibank • Phelps Dodge • Duke Energy • Freeport McMoRan • Procter & Gamble • Kimberly Clark • Coca Cola Comp. • Chevron Corp. • Cargill • Kraft • Sempra • PSEG • Newmont • Doe Run

• Telefónica • BBVA • Endesa • Repsol - YPF • HSBC • Flughafen Frankfurt • Suez Group • Xstrata • Acea /Impregilo • Messer • Faber Castell • Deutsche Bank • Grupo Santander • Grupo Fierro • Ashmore • SN Power • Elecnor / Isolux • Polysius • OHL • Orient Express • Cimpor

Anglo American Sonatrach Gold Fields Sab Miller

28

Large public projects have been granted in concession over the last decade (US$10.3 billion)

____________________ Source: PROINVERSION

14 Concessions in Road Transportation Sector (2002 – 2011)

US$ 2,360.9 MM in investment commitments

19 Concessions in Energy Sector (1998 – 2011)

6 Concessions in Port Sector (1999 – 2011)

3 Concessions in Airport Sector (1999 – 2011)

US$ 4,597.3 MM in investment commitments

US$ 1,743.5 MM in investment commitments

US$ 1,622.6 MM in investment commitments

29

III. Areas in need of improvement

30

There is certainly no room for complacency

PERU: Fuente: World Economic Forum, The Global Competitiveness Report 2011-2012

Innovation

Health and primary education

Institutions

Infrastructure

Higher education and training

Technological readiness

Business sophistication

Macroeconomic environment

Goods market efficiency

Market size

Labor market efficiency

Financial market development

Bottom of scale top of scale

38

43

48

50

52

65

69

77

88

95

97

113

31

The need is particularly significant in infrastructure

Source: World Economic Forum, The Global Competitiveness Report 2010-2011. 32

IV Risks and mitigating factors

33

External Risks

Downside • Weaker and more protracted than anticipated global recovery • Lower commodity prices • Sustained sharp increase in food an oil prices • Higher volatility of capital inflows and reversal of in risk appetite • Intensification of drug trafficking and associated violence Upside • Stronger, faster and more sustained than anticipated global recovery • More favorable than expected terms of trade • Higher inflows of FDI

Mitigating factors: strong NIR position, low external debt, flexible exchange

rate, and ample room for fiscal and monetary maneuver

34

Domestic Risks: Tilted to the Upside

Upside Risks • Stronger than expected recovery of net exports • Higher than anticipated private investment, especially into

PPP for infrastructure • Continuation of the economic and social model

Downside risks • Reversal of social development weakening social cohesion

in support of sustained growth • Political risk

35

Social Risk Sustained growth and poverty reduction are key in in mitigating social risk

URBAN EMPLOYMENT (% change) URBAN EMPLOYMENT IN LATIN AMERICA

(% of population in working age)

42.7 42.4

47.548.4

54.8 54.352.2

48.6 48.7

44.5

39.3

36.234.8

30.480

90

100

110

120

130

140

150

160

170

30

35

40

45

50

55

60

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Pobreza PBI pér capita

POBREZA Y PBI PER CAPITA

POVERTY (% of population)

- - - GDP PER CAPITA (2003=100)

-1.9

0.0 1.7

2.7

4.5

7.2 8.3 8.3

1.3

4.2 5.4

2001 2003 2005 2007 2009 2011

-

15

-

10

-5

0

Peru Brazil

Ecuador

Chile Latin America

Dom. Rep.

Honduras Guatemala

Panama

Paraguay

Colombia

Costa Rica

Mexico

Latin America: Poverty Reduction 2005 -2009

(Change in percentage points)

36

0

10

20

30

40

50

60

70

Arg

enti

na

b/

Bra

sil

Ch

ile b

/

Co

lom

bia

b/

Co

sta

Ric

a c/

Ecu

ado

r b

/

Jam

aica

d/

Mex

ico

Pan

amá

e/

Par

agu

ay b

/

Pe

rú b

/

Rep

. Do

min

ican

a f/

Uru

guay

Ven

ezu

ela

(Re

p. B

ol.

de)

54.4 53.1 53.2 57 56.4

53 54.9 56.4

59.1 57.9

64.5

47

58.9 59.1 55.2 53.6 55.5

58.4 57.8

51.6 54.5

56.6 59.8

57.5

64.4

48

60 58.9

2010

55.6 55.2

50.3 51.1 50.9

51.7

49.0 49.1 48.1

2002 2003 2004 2005 2006 2007 2008 2009 2010

GINI INDEX - PERU

Source: World Bank Indicators

LATIN AMERICA (18 COUNTRIES): GINI INDEX 1990-2002, 2002-2008 AND 2008-2010

1990-2002 2002-2008 2008-2010

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the respective countries.

37

Social Risk …the same goes for ensuring that income growth is equally distributed

Source: INEI, MINTRA

Social Risk It is encouraing that income growth in Peru has been more pro-poor and decentralized, and as a result,

there is a rapidly growing emerging middle class

0 1000 2000 3000 4000 5000 6000

Quintil 1

Quintil 2

Nacional

Quintil 3

Quintil 4

Quintil 5

2010

2005

5.1

37.3

48.9

49.7

54.4

74.1

0 1000 2000 3000 4000 5000

Sierra

Selva

Costa

Nacional

Lima M.

2010

2005

38.1

48.9

47.5

85.2

59.8

Average Monthly Income by Household (Current Nuevos Soles)

By Region By Quintile

38

39

54.4 54.8 48.7

44.5 39.3

36.2 34.8 30.9

27.3 23.0 24.4

17.4 16.1 13.7 12.6 11.5 9.8 11.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

1991 2001 2005 2006 2007 2008 2009 2010 Goal2015

Erradication of Extreme Poverty and Hunger

Total Poverty (% of Population with less than 2 US$)

Extreme Poverty (% of Population with less than 1 US$)

Net Rate of Primary Education Enrollment (%)

Literacy Rate (% of population between 15-24 years old)

Promote Gender Equality and Women's Autonomy

1.00 0.99 0.98

0.99 1.00 0.99

1.00 1.00 1.01 0.99

1.00 0.99

1.01 1.00

1.01 1.00

0.97

1.02 1.02

1.04 1.04

1.10

1.12

1.00

0.850

0.900

0.950

1.000

1.050

1.100

1.150

2004 2005 2006 2007 2008 2009 2010 Goal 2015

Primary Education (ratio of girls to boys attendance)

Seconadry Education (ratio of girls to boys attendance)

94.594.7

96.2

96.7 96.696.8

96.5

100

2004 2005 2006 2007 2008 2009 2010 Goal 2015

94.094.3

95.3 95.395.6

96.2

96.6

100

2004 2005 2006 2007 2008 2009 2010 Goal 2015

Social Risk Progress achieved in addressing basic development needs has

also helped as a mitigating factor

43.0

33.0

21.0 21.0 21.0 19.0 19.0 20.0 17.0 17.0

59.0

47.0

29.0 29.0 29.0 27.0 27.0 26.0 23.0 23.0

0.0

20.0

40.0

60.0

80.0

Base 1996 2000 2004 2005 2006 2007 2008 2009 2010 Goal 2015

Infant Mortality Rate Infant Mortality Rate (more than 5 years)

Reduction of Mortality in Infants below 5 years old

40

66.0 63.0 59.2 48.6 45.5 40.0

29.3 26.7 20.4

0.0

20.0

40.0

60.0

80.0

100.0

2002 2003 2004 2005 2006 2007 2008 2009 2010

PROPORTION OF RURAL POPULATION THAT USE SOLID COMBUSTIBLES LIKE CHARCOAL OR WOOD TO COOK THEIR FOOD (PERCENTAGES)(2002-2009)

Social Risk …a widespread set of social and environmental issues has been

addressed

Political Risk Markets price in politically driven uncertainty relatively quickly

41

As of March 15,2012 Source Bloomberg, IPE

Cabinet change Dec. 11, 2011

Uncertainty during election period

Political risk mitigating factors: March-July 2011: Announcement of a new government program by President Ollanta´s party

Dec 2011: Renewal of cabinet members was well received

Thank You

42