Measures were also taken to reform the operations relating to the issuance of government securities, introduce a new investment policy framework for the EPF, strengthen internal audit and introduce the code of conduct for employees and the members of the Monetary Board. The procurement process for several forensic audits is underway, and forensic audits are to be conducted by entities with global practice. In a challenging global and domestic environment, the Central Bank is steadily improving its policy frameworks to mitigate possible risks and thereby achieve its broad objectives of economic and price stability and financial system stability. Our actions would be effective and yield desired outcomes only if certain conditions are met, especially the commitment of the government to macroeconomic stability. Given the prevailing low growth trajectory, growth promoting policies and structural reforms are much needed priorities for the government. This must, however, be done without disrupting the fiscal consolidation process. For this to happen, the enabling environment must be 10  created for the private sector to play a more active role. We need consistent and predictable policies from the government and a more dynamic and entrepreneurial mindset from businesses. Government’s initiatives aimed at improving the economic and social infrastructure of the country, enhancing productivity, up- scaling skill levels of the labour force as well as expanding domestic production capacity are vital elements to support an accelerated and sustainable level of economic growth, while maintaining a continued low inflation environment.

These factors affected the government’s borrowing cost and imposed pressure on achieving targets under the Medium-Term Debt Management Strategy (MTDS), particularly towards the latter part of 2018 with the upward adjustment in yield rates and market preference for short to medium term maturities. 34  The new Treasury bond issuance system, which was introduced, in July 2017, was reviewed at the end of first quarter of 2018 taking into account the performance of the issuance system and the feedback from market participants to further enhance the efficiency and transparency of the issuance process of government securities. Several improvements, including an enhanced market based acceptance arrangement as a prerequisite for the activation of phase III are to be introduced to the Treasury bond issuance system, by the end of the first quarter of 2019. Further, the auction calendar for Treasury bonds and Treasury bills was published by the Central Bank on a rolling basis with the view of improving transparency and predictability of the primary auction process and the government securities market in general. We are contemplating taking several measures to develop market and debt management practices in 2019. With the passage of the Active Liability Management Act (ALMA), in March 2018, we have laid the groundwork for liability management exercises in the domestic and foreign market. In consultation with the Ministry of Finance, we have already earmarked actions to implement liability management techniques on future debt obligations and the proceeds mobilised would be maintained in a ring-fenced arrangement to meet future debt liabilities.