June 2007 PERU

“Projected GDP growth of 7% until 2010”

Sustainable economic growth with annual forecasted rate around 8% Source: International Monetary Fund and the Central Reserve Bank of Peru. Developed World GDP Growth (Annual variation %) 6,4 5,2 3,9 5,2 Peru 8,03

Source: Central Reserve Bank of Peru. * Forecasted % 37% 35% 41% 10% ,1 0,2 0,3 0,4 0,5 0,6 0,7 Exports in millons US$"% Exports Growth (base 2000)" Private Investment Private Investment grew Private Investment Private Investment grew 20,1% in 2006* Annual Exports growth greater than 30%Accompanied by private investment growth (average annual % variation)

Increase in the imports of capital goods ( Millions of US$) Rise in the commercial exchange (Millions of US$) Source: Central Reserve Bank of Peru. Capital goods for the Industry Transport Equipment Others

...in a framework of macroeconomic stability...

Source Central Reserve Bank of Peru. * Forecasted by the Ministry of Economics and Finance Source: SUNAT Peru is progressively reducing its fiscal deficit (overall balance; % of GDP) 0,5 By increasing its central government tax revenues -3,3 -2,5 -2,3 -1,7 -1,1 -3,5 -3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0 -0,4 2, * 1,0 1,5 2,0 2,5

With increasing Net International Reserves that represent more than 12 months of imports JP Morgan Index EMBI+** The careful and responsible management of our economic program has allowed us to keep our country risk index among the lowest in the region. Source:Bloomberg Updated 23 March, 2007 Source: Central Reserve Bank of Peru. Net International Reserves (Milions of dollars) ,3% 11,4% 6,2% 24,4% 11,2% 22,5% ,05 0,1 0,15 0,2 0,25 0,3 0,35 0,4 0,45 0,5 Net International Reserves (in US$ Millions)" Annual Variation

Free and preferential market access to:  United States  European Union  Mexico  Chile  Andean Community of Nations  MERCOSUR  Thailand* Peru has concluded the negotiations for the Trade Promotion Agreement (TPA) with the United States Trade Agreements under negotiation or consideration: Singapore EFTA Canada China European Union South Korea

Peru offers a favorable legal framework for foreign investment Legal Framework: 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° PCM Non discriminatory treatment. Irrestrictive access to most economic sectors. No performance requirements. Free transfer of capital. Free competition. Guarantee for Private Property. Freedom to purchase stocks from locals. Freedom to access internal and external credit. Freedom to pay royalties. Network of investment agreements and member of ICSID and MIGA

Peru: some economic indicators Source: Central Reserve Bank of Peru, National Institute of Statistic and Information and SUNAT ,86,48,03 9,113,920,1 5,712,213,0 2,74,57,3 40,935,336,9 19,629,635,4 4,78,414, Pensions Funds (var %) IGBVL General Index of the Stock Exchange Market of Lima (var %) Tax Collection (var %) Exports (var % in US$) Imports of capital goods (var % in US $) GDP of the construction sector (var %) Private Investment (var %) Public Investment (var %) Employment in companies with over 10 employees (var %) GDP (var %)

But institutions need to be reinforced and we still require a social reform

Populism: a fatal attraction Source: The Economist.

A dangerous candidate… …fortunately we didn’t choose him

Composition of the Peruvian Congress

Grupo Parlamentario Especial Demócrata (3) Grupo Parlamentario Nacionalista (22) Unión por el Perú (20) Source: Peruvian Congress.

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable” - Adam Smith

Poverty

Malnutrition

PERU

A country with a great historic tradition;

Home of the Inca Empire, a great civilization,

Fotografía: Vera Lentz / Diario La República. It has experienced difficult circumstances of violent terrorist acts from which it is recovering

Although its economy has grown thanks to the excellent metal prices,

Foto: José Loo /Archivo “La República” Peru is still a country where half of its population lives in poverty

and a fifth in extreme poverty Fotografía: Marianna Mindreau Puente.

Foto: Jhony Laurente /Archivo “La República” Without access to basic needs such as water supply

electricity Fotografía: Marianna Mindreau Puente.

health services Fotografía: Marianna Mindreau Puente.

And where half of the population does not have an adequate job, Foto: Christian Salazar /Archivo “La República”

Where malnutrition affects 25% of the child population

And 50% of the children under five years of age is affected by anemia, Fotografía: Marianna Mindreau Puente.

However, things can change.

Foto: Martin Pauca/Archivo “La República”

We need investments that provide formal jobs, abiding by the laws,

training

And for that,

We need markets

The Free Trade Agreement with the United States demanded a great effort by the negotiators of both countries

With it, both countries agree to make temporary and unilateral preferences, long term commitments for both sides.

This would let Peruvians overcome poverty Fotografía: Marianna Mindreau Puente.

With formal jobs

With better employment conditions

Fotografía: Vera Lentz / Diario La República. Without room for terrorist violence and drug trafficking Juan Manuel Vilca / Diario La República

For better countries living in democracy; for a better American continent… Fotografía: Marianna Mindreau Puente.

Support the Free Trade Agreement with Peru