1. 11 Perú Macroeconomic Performance and Perspectives Luis Carranza Ugarte Ministry of Economy and Finance April, 2009 Ministerio de Economía y Finanzas

2. Global Economic Environment

3. 3 Source: Bureau of Labor Statistics The international scenario worsens… Source: Conference Board Light-Weight Vehicle Sales (Millions) (Millions) Source: US Department of Commerce Consumer Confidence Index University of Michigan (January 1966 = 100) Non-Farm Payrolls (Thousands) Case-Shiller Index Spurce: Standard and Poors

4. 4 Standard & Poors 500 Index (Monthly Percent Change) In the middle of a fast and pronounced stock-exchange fall…. Source: Bloomberg Months

5. 5 With uncertainty in markets… Volatility Index (VIX) Baltic Dry Index - BDI (BALDRY) TED Spread

6. Impact of Financial Crisis in Peru

7. Through lower commodity prices Source: MEF

8. Impact of global crisis on the Peruvian economy Global Demand Liquidity (flows) Public SpendingFiscal Income Price Exports Exports Investment Uncertainty Credit

9. Financial Impact: stable exchange rate Currency Devaluation in Latin America (Annual percentage change of daily data) Source: Bloomberg Chile34.2 Brasil31.1 México35.5 Perú12.1 Argentina16.3 Colombia28.5 Sound Stability of the Exchange Rate

10. Financial Impact: Country Risk performing well EMBI spread in Latin America (Spread above the US Treasury, in basis points) Panamá475 Brasil428 México369 Perú399 Colombia475 Source: Bloomberg

11. Source: LatinFocus Regional Growth (Annual percentage change, in real terms) Regional Inflation ( Annual percentage change of CPI) Consensus: Peru outperforms in the real sector

12. Impact on Domestic Demand Overall Demand (Annual percentage change, in real terms) Source: BCRP

13. Impact on labor Employment in Lima (Average annual percentage change) Employment in Rest of Urban Cities (Average annual percentage change) Source: BCRP

14. Inflation is starting to fall CPI: Food Products (Annual percentage change) PPI Agricultural Products (Annual percentage change) Source: INEI Imported Domestic Imported Domestic

15. Peru’s Economic Strengths

16. Devaluation since 01/09/08 Reserves / GDP 2008 Because of our macroeconomic strength Source: BCRP

17. Outstanding performance of the capital expenditure Non Financial Expenditures of Central Government (Annual percentage change, in real terms) 1Q081Q09Var. % Current Expenditure9,08810,59310.4% Wages and Salaries3,4653,604-1.5% Good and Services1,9142,42620.0% Tranfers3,7094,56316.5% Pensions 1,0411,065-3.1% Socials Charges 23728212.7% Foncomun 790680-18.5% ONP 4204736.5% Others 1,2212,06360.0% Capital Expenditure9271,63867.4% Gross Capital Formation 7121,11247.9% Other215526132.1% Total10,01512,23115.7%

18. Low interest rates favor investment Source: Bloomberg Domestic Currency Sovereign Yield Curve (Percentage)

19. Aggressive monetary easing Reference Rates (%) Source: Bloomberg Inflation (%)

20. Financial System Structure Big Size Banks Medium Size Banks Small Size Banks Rural S&Ls Financial Companies Assets39,2183,9892,381219433384291 Share of total84%9%5%0%1% Liquid Assets37%24%22%16%21%10%7% Net Loans56%67%68%77%71%82%83% Deposits - With the public66%57%55%63%62%0% - Financial System6%7%5%3%2%0%10% Due to Banks12%17%14%12%17%72%52% Bonds4%3% 0% 15% Saving and Credit Cooperative Local Government S&Ls Source: SBS, September 2008

21. Source: WEF Peru: Competitiveness Indicators (ranking) Competitive Advantages Good economic performance and adequate economic policy Competitive Disadvantages Legal and social issues  Peru’s strengths and weakneses  Macroeconomics is OK, but infrastructure and education are the long-run challenges.

22. Peru’s Economic Plan

23. Plan Objectives Maintain employment creation through public investment expansion (around 30% of total employment generation in 2009 should be generates by the plan) Keep inflation within Central Bank range target along with a sustainable balance of external accounts Soft convergence to long term 6-7% growth rate, given a global growth of 3%

24. Main features of the economic plan Infraestructure Construction Retraining Labor programs Uncertainty Liquidity shortage Infrastructure Financing Credit Lines Public Guarantee Funds Credit Crunch Unemployment

25. Lines of action: Execution Strategy Project Portfolio Selection Support Cells Formation SC Project Diagnosis Formation of External Advisory Group AG Project Production Line Development Execution plan for each project along with the execution unit SC and AG accompany the execution constantly

26. Lines of action: Project Selection

27. Amounts contained in the plan

28. Forecasts and Long Term

29. Sustainable external accounts balance

30. Public investment important role Source: MEF Overall Demand and Supply (Annual percentage change, in real terms)

31. Operations of the Non-Financial Public Sector (As a percentage of GDP) Anti-Crisis Plan (US$ 2,500MM) Financing Plan Fiscal stimulus: public investment

32. 32 Perú Macroeconomic Performance and Perspectives Luis Carranza Ugarte Ministry of Economy and Finance March, 2009 Ministerio de Economía y Finanzas