GENERAL INFORMATION

The Minister of Finance in the name of the Republic of Hungary (the "Issuer"), pursuant to the authorization set down in the Act on the Budget for the given year issues discount Treasury bills in order to finance the central government deficit and to renew maturing government debt. The Minister of Finance fulfills this task through the Hungarian State Treasury Government Debt Management Agency (ÁKK).

The present Prospectus shall apply exclusively to the general terms and conditions of the issue and placement of discount T-bills sold through auctions in the domestic market.

Pursuant to the authorization of the CXI Act of 1996 (hereinafter: Securities Act) ÁKK has issued the new series of discount Treasury bills through auctions in dematerialized form since 12 April, 1999.

The terms and conditions of the T-bills, including the ISIN code, the date of the issue (settlement) and the auction, the amount offered at the auction, the redemption date are contained in the Announcement on the issue.

The Act CXI of 1996 on the Placement of Securities, the Investment Services and the Stock Exchange does not require for discount T-bills to prepare a prospectus on the issue. Nevertheless, the Announcement and the present Prospectus contain the data of the issue in accordance with the provisions of the Act, in order to provide full information to investors.

The present document has not been submitted to any securities authority other than the Hungarian Banking and Capital Market Supervision. Due care has been taken to avoid discrepancies between the Hungarian and English versions of this document. If, however, any discrepancy might arise, the Hungarian version should be considered as official binding document.

The purpose of the issue

The proceeds of the issue that is transferred to the account of the Hungarian Sate Treasury will be used to partly finance the deficit of the central government and to renew maturing debt.

General terms and conditions

Features of Discount T-bills

The T-bill is a transferable security in bearer form.

The discount Treasury bill constitutes direct, general and unconditional obligation of the State to pay the current holder the amount indicated in the T-bill at the time and in the manner specified. The payment of the principal of the discount T-bill shall be borne by the central budget of the Republic of Hungary, no statute of limitation applies to discount Treasury bills.

Eligible Buyers

The discount T-bills can be purchased and traded by resident individuals, legal entities and non incorporated economic associations. In defining resident and non resident status the provisions of the Act on Foreign Exchange shall govern.

Denomination

The minimum denomination of the discount T-bill is HUF 10,000, i.e. ten-thousand Hungarian Forints.

Type of public placement: auction

The terms and conditions of the participation at the auctions and the auction process are laid down in the "Terms and Conditions of Discount Treasury Bill Auctions" (The "Terms and Conditions" is enclosed to the present Prospectus as Supplement A). Banks and broker-dealer companies that are entitled to participate at the auctions can accept auction orders in line with their own business rules. The list of these entitled financial institutions can be found in Supplement B.

The Issuer organizes auctions for 12-month and 6-month T-bills bi-weekly, for 3-month T-bills weekly.

Primary market

Dematerialised discount Treasury bills

Dematerialised discount T-bills are data recorded, forwarded and registered on security accounts in electronic form in accordance with the Securities Act and other relevant laws, and include in an easily identifiable manner all important details - prescribed by the law - of the securities. Dematerialised discount T-bills are registered on securities accounts of banks and broker-dealer companies held at KELER and on security accounts of clients kept by banks and broker-dealer companies.

KELER Plc. keeps the banks and broker-dealer companies' own securities on the "A" type central security account, while the securities of banks' and broker-dealer companies' clients on the "B" type central security account in aggregated form.

The Issuer instructs the Custody of KELER to deposit the discount T-bills issued with the security accounts of the banks and broker-dealer companies (investment companies) on the settlement day by giving the information on the amount of securities to be credited at each bank's or broker-dealer company's security account, if the countervalue of the T-bills is available at the cash account of the investment companies. Following the crediting of the accounts the banks or the broker-dealer companies may give instruction to credit security accounts of the security accounts holders or the security accounts keepers authorized by security holders (financial institutions and investment companies). Secondary market transactions are recorded and the stock of discount T-bills outstanding is registered in the security accounts.

Investors are to appoint the credit institution or broker-dealer company as security account keeper entitled to trade in dematerialised securities, with which they conclude security account and client account contract. The security account keeper accepts orders related to security accounts during its working hours determined in its business rules.

The client account may be used for transfers related to investment services, or for transfers to a bank account of the client kept at a credit institution. The account keeper informs the account holder by sending an account statement - in accordance with the manner defined in its business rules - on each credit and debit transaction on the security or client account.

Discount T-bills in physical form

The following rules are applicable to discount T-bills produced in physical form and are effective till the dematerialization process of discount T-bills is not over.

Following the discount T-bill issuance, the Issuer shall deposit the final total issue amount with KELER in form of one global note. In accordance with the Issuer's instructions, KELER shall deposit the T-bills purchased on the accounts of security deposit account holders held at KELER on the settlement day, if the countervalue of the securities (the purchasing price) is available on the cash account of the bank or the broker-dealer company. Later on the registration and the trade of discount T-bills is effected on security deposit accounts. Investors are to appoint their own custodian in order to place their securities at the deposit account kept by the custodian.

Discount T-bills in physical form

The following rules are applicable to discount T-bills produced in physical form and are effective till the dematerialization process of discount T-bills is not over.

On the settlement date discount T-bills are listed on the Budapest Stock Exchange (hereinafter: BSE) - with the exception of three month discount T-bills fom 3 January, 2000 - on the basis of a simplified procedure in line with the agreement between BSE and ÁKK.

Trading in discount T-bills in the BSE shall continue until the 5th business day preceding redemption. The payment is effected on the T+2 business day in line with the "KELER Government Securities Settlement Rules relating to Stock Exchange transactions".

The Issuer does not redeem discount T-bills before maturity.

Payment

The Hungarian State Treasury, Government Debt Management Agency shall act as principal paying agent. The nominal value of discount T-bills registered at security or security deposit accounts at KELER is paid by ÁKK with transferring the countervalue to the custodians or the security account keepers on the initiative of custodians or security account keepers acting on the order of their investors and on the basis of the data supplied by KELER. If the custodians or security account keepers commit any fraud or breach the contract the State refuses all claims related to the payments.

Payment on (bank) holidays:

If the due date for the payment of any amount related to the trade in discount T-bills is not a business day in Hungary, the investor of T-bills is not entitled to demand the disbursement of any amount payable to him until the next business day. In this case the payment date is the next following business day. In respect of any such delay the holder is not entitled to any further interest or other payment.

For investors, business day is the day when banks are open and provide services to their clients in Hungary and KELER Plc., and National Bank of Hungary effect payments.

Taxation

Taxation shall be effected in accordance with the legal regulations in force at all times.

According to the regulations currently in force, the difference between the face value of discount T-bills and the purchase price qualifies as interest income, which is taxed at zero percent.

Announcements

The Issuer shall publish the announcements related to discount T-bills in Magyar Tőkepiac and in one national daily, currently Magyar Nemzet. The day of the first appearance shall be regarded as the day of publication of such announcements.

Governing law

The laws of the Republic of Hungary (Government-Decree No. 28 of 1982 on bonds; Act CXI of 1996; Government-Decree No. 23 of 1987 on Treasury bills and the provisions of the Civil Code) shall govern the conditions of the issue of discount treasury bills. Any legal dispute between the Issuer and the holder(s) of the discount T-bills shall be referred to the Budapest Capital City Court.