Aberdeen Australia Equity Fund, Inc. (NYSE AMEX: IAF) (the “Fund”) announced today that it has commenced a public offering of 2 million of its shares of common stock pursuant to the Fund’s effective shelf registration statement filed with the U.S. Securities and Exchange Commission (the “SEC”). The Fund also intends to grant the underwriters a 45-day option to purchase 300,000 additional shares of common stock to cover over-allotments, if any. Net proceeds of the offering will be used to make additional portfolio investments that are consistent with the Fund’s investment objectives and policies.

Citigroup Global Markets Inc. and Morgan Stanley & Co. Incorporated are acting as co-lead book running managers for the offering. The offering of these securities will be made only by means of a prospectus. A copy of the preliminary prospectus supplement and accompanying base prospectus relating to the offering may be obtained from the following addresses:

Citigroup Global Markets Inc.Attn: Prospectus DepartmentBrooklyn Army Terminal140 58th Street, 8th FloorBrooklyn, NY 11220Telephone: 800-831-9146

Morgan Stanley & Co. IncorporatedAttn: Prospectus Department180 Varick Street, 2nd FloorNew York, NY 10014Telephone: 866-718-1649

Investors may also obtain these documents free of charge from the Fund’s website at www.aberdeeniaf.com or the SEC’s website at www.sec.gov.

An investor should read the Fund’s preliminary prospectus supplement and accompanying base prospectus carefully before investing. The preliminary prospectus supplement and accompanying base prospectus contain important information about the Fund and its investment objectives and policies, risks, charges and expenses.

This press release does not constitute an offer to sell or a solicitation to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

A registration statement relating to these securities was filed with, and has been declared effective by, the SEC. The securities being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the prospectus supplement, prospectus or shelf registration statement.