1. Hungary for Convergence László Búzás Managing Director ÁKK Rt.

2. Inflation target Budget deficit Debt/GDP Convergence of long-term rates Market development Market harmonisation Convergence Criteria

3. Inflation Inflation

4. Budget Deficit as Percentage of GDP The 2002 figure excludes one-off items related to the introduction of the ESA95

5. Debt/GDP

6. Convergence of Long-term Rates Convergence of Long-term Rates

7. The real change comes with EMU-membership Market harmonisation Market development Main goal: Creation of a competitive, efficient and EMU-compatible government bond market EU-Convergence

8. Price quotation Settlement circle Coupon payment frequency Yield calculation Business days (TARGET) Redenomination Market Harmonisation: Conventions

9. Auctions (Rules and Frequency) Product innovation Secondary market Primary dealers Foreign investors Market Development

10. 154 auctions in 2002 (104 T-Bill and 52 Bond) Reverse auctions(25) New auction calendar in 2003: The number of bond auctions will decrease from 52 to 46 Less 3 years, more 15 years Larger amounts Auctions

11. Auction Calendar

12. 3, 6 and 12 month T-Bills 3, 5, 10 and 15 year bonds Less bond series (4 new bond series in 2003) Larger sizes of the individual bond series 2001<EUR 1 bn 2002= EUR 1 bn 2003> EUR 1.5 bn Increasing liquidity Product Innovation

13. Primary dealers (13 in 2002) Exchange auctions Securities lending Repo facility Electronic trading system Secondary Market

14. Foreign holdings equal to HUF1800 billion An increase of HUF 730 billion in 2002 5% T-Bills – 95% Bonds Approximately 50% of the marketable bonds Average maturity 3.5 years Foreign investors

15. Public debt : HUF 9224 billion Approximately 56% of GDP Domestic debt 75.4%, foreign debt 24.6% Loans 19%, bonds 81% Average maturity: 2.33 years Duration: 1.96 years The Public Debt Portfolio

16. Auction Calendar Gross and Net Financing Requirements Remark: 2002 excludes one-off items related to the introduction of ESA95

17. Domestic Debt: Maturity Profile

18. External Debt: Maturity Profile

19. More information Thank you for your attention! www.akk.hu

20. Benchmark Yield-curves

21. Yield Developments