Aberdeen Australia Equity Fund, Inc. (NYSE AMEX: IAF) (the “Fund”), a closed-end equity fund, announced today that it will pay a quarterly distribution of US 28 cents per share on January 14, 2011 to all shareholders of record as of December 30, 2010 (ex-dividend date December 28, 2010).

The Fund has a managed distribution policy of paying quarterly distributions at an annual rate, set once a year, that is a percentage of the rolling average of the Fund’s prior four quarter-end net asset values. In March 2010, the Board of Directors determined that the rolling distribution rate would be 10% for the 12 months commencing with the distribution payable in April 2010. This policy will be subject to regular review by the Fund’s Board of Directors. The distributions will be made from current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital.

For the 12 months to November 30, 2010, the Fund has paid total distributions amounting to US $1.01 per share. The composition of distributions paid by the Fund since the beginning of the Fund’s fiscal year, November 1, 2010, will be estimated through the payment date, and announced at the time of payment of the distribution.

The Fund is managed by Aberdeen Asset Management Asia Limited and advised by Aberdeen Asset Management Limited. The Fund’s shares trade on the NYSE AMEX under the symbol “IAF”.

You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan.

If you wish to receive this information electronically, please contact InvestorRelations@aberdeen-asset.com

www.aberdeeniaf.com

Aberdeen Asset Management Asia Limited and Aberdeen Asset Management Limited are registered investment advisers under the Investment Advisers Act of 1940.

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