Issuance Conditions of 55. Issue of Treasury Bonds - T-Bond VAR %, 16 - CZ0001002331

Czech Republic Treasury Bond, 2008-2016, VAR

As of 3rd October, 2008

The Ministry of Finance issues bonds in accordance with § 25 of Act No. 190/2004 Coll., on Bonds as amended ( hereinafter only Bond Act) and determines issuance conditions of Czech Treasury Bonds, 2008-2016,VAR:

1. Basic characteristics of bonds:
   Issuer: Ministry of Finance on behalf of the Czech Republic
   Name: Czech Republic Treasury Bond, 2008-2016,VAR
   Name in short: ČR, VAR,16
   Serial number of issue: 55
   Face value: CZK 10 000
   Form of bond: bearer
   Type of bond: book-entered
   Date of issue: 27^th October, 2008
   Date of maturity: 27th October, 2016
   Interest yield: coupon with variable interest rate
   Taxation of interest yield: under legal regulations of the Czech Republic
   ISIN: CZ0001002331

2. Bonds are issued in terms of § 25, paragraph 2 of Bonds Act, based on particular acts that allow treasury bonds issuance.

3. Bonds are on bearer and are issued in book-entered form. The holder register is kept by the Prague Securities Centre.

4. Bonds may be acquired by legal or natural entities that have seat or residence in the Czech Republic as well as abroad. Repatriation of yields and paid-up face value abroad shall be carried out under legal regulations of the Czech Republic.

5. Issuer submits a proposal for admission of the bond on the Prague Stock Exchange trading.

6. Each bond will bear interest at the floating interest rate. Reference rate is 6M PRIBOR with the rate fixed for 6 month, valid for one interest period. Interest yield shall be paid twice a year, always on interest payment dates: 27^th April and 27^th October of the respective year. In case that the day of payment falls on a non-working day, the payment shall be carried out on the next working day with no claim to yield for postponed payment.

7. Interest rate for the first interest period will be determined on the auction day, for each successive period will be determined on the second working day ahead of the first day of the successive interest period. Interest rate will be published on the day of determination.

8. The decisive day for the payment of bond interest yield foregoes by one month the interest payment day. The ex-coupon date is the day following the decisive day, and it is fixed on 28^th March and 28^th September. The investor who is bondholder on 27^th March 2009 shall receive the interest yield for the first period since 27^th October 2008 to 27^th April 2009.

9. Transferability of bonds in the Prague Securities Centre shall commence on the day of crediting the respective bonds in the accounts of first holders. The last day, when transfers of securities in holder accounts in the Prague Securities Centre shall be carried out, shall be 27^th September 2016.

10. Calculation of the proportional part of interest shall be made on the basis of a year with 360days and actual number of days in the period ( day count fraction act/360).

11. Bonds shall be issued in separate tranches. Primary sale of 1^st tranche shall be carried out through auction organised by the Czech National Bank for a group of primary dealers on 22^ndOctober 2008. Other investors may participate in the auction through primary dealers. The announcement on the auction and the list of primary dealers shall be published in advance. Primary sale of subsequent tranches shall be carried out under the same conditions. The issuance period shall be terminated on the 27^th September 2016.

12. The bids given to auction by primary dealers are settled gradually starting from the highest offered price. As far as the bids with a certain price exceed the marketed volume of bonds, the bids with those price are cut off and only partly settled. The bonds are sold at offered prices.

13. The total anticipated volume of the bond issue is CZK 40 000 000 000. The bonds can be issued in lesser or larger volume in accordance with § 11 of Bond Act and in such quantity that corresponds with the development and structure of financing of the state debt. The issued volume can be raised up to CZK 80 000 000 000.

14. Rating of validation of debt in domestic currency was carried out and published by Standard and Poor´s Company at a level A+, Moody´s at the level A1.

15. Detachment of the right to bond yield under §18 of Bond Act is not applied.

16. The Ministry of Finance declares that it owes to each bondholder the face value of the respective bond. The bonds shall be paid up in the face value on 27^th October 2016. The interest running terminates on that day. The face value of the bond along with the last interest yield shall be paid to investor who is bondholder on 27^th September 2016. In case that the day of payment falls on a non-working day, the payment shall be carried out on the next working day with no claim to yield for postponed payment.

17. All rights connected with bonds and coupons issued in relation with § 42 of Bond Act shall become statute-barred with the expiration of ten years since the day when such rights could be applied for the first time.

18. The Ministry of Finance pledges to ensure the payment of bond interest yields and to pay up face value of bonds to the bondholders in accordance with hereby issuance conditions. The place of payment is the Czech National Bank. The place of payment shall publish the way by which the payment of the coupons and the face-value shall be carried out.

19. The bonds are direct, unconditional and unsubordinated obligations of the Czech Republic that rank pari passu with any present and future direct, unconditional and unsubordinated obligations of the Czech Republic.

20. Announcements for the public relating to these bonds shall be published in Hospodářské noviny or in another daily of similar orientation available in the Czech Republic as well as in way that allows remote access.

21. These issuance conditions may be translated into foreign languages. In case of differences between various language versions of issuance conditions, the Czech version shall be decisive.

Minister of Finance:
Ing. Miroslav Kalousek