Another important element in our transition towards FIT is improving the skills, capabilities and capacities of our staff as well as the systems and procedures to establish a solid framework for forward-looking monetary policy conduct. A key step towards this advancement was when we partnered with the IMF, 4 years back, to develop a comprehensive, model-based Forecasting and Policy Analysis System (FPAS) to enhance the monetary policy decision making process. Substantial progress has been made in this regard, yielding a marked improvement in the modelling and forecasting capacity of the Central Bank, thereby enhancing the forward-looking monetary policy decision making process. The details of this modelling framework are in the public domain now. Going forward, the Central Bank will focus on devoting resources towards 15  further improving technical capacity and infrastructure, which would help generate timely and reliable model-based projections for macroeconomic analyses. The Central Bank has already planned to launch a number of new surveys and compile an array of new indicators to support monetary policy analysis. We continuously endeavour to improve the existing data collection and compilation efforts. These include several production trends related early warning indicators, upgraded price indices, extension of PMI surveys to sectors that need focused attention, and several digitalisation initiatives. We are also in the process of further expanding the household sector Inflation Expectations Survey (IES) beyond the Colombo District through the Country-Wide Data Collection System (CWDCS) with the intention of improving its coverage and precision.

Accordingly, procedures for inward capital flows by foreign investors were further simplified and streamlined while limits on outward capital flows by residents were further 37  broadened in selected areas. The new regulatory measures also include the relaxation on foreign exchange transactions, which enable general permission to Authorised Dealers to transfer enhanced eligible migration allowance in order to overcome procedural delay. We are in the process of reviewing stakeholders’ feedback on the new regulations, orders and directions issued in 2017 under the FEA and intend to revisit those with a view to further simplifying the regulations to improve clarity. We intend to take actions to revisit liberalised capital transactions based on the analysis of macroeconomic dynamics supported by policy oriented research. We also plan to review the criteria in granting permission for money changing businesses to increase healthy competition among market players and reduce informal market activities. The monitoring function will be strengthened further by developing a new real time foreign exchange reporting and monitoring system to capture data on foreign exchange sales and purchases. With a view to obtaining all data pertaining to cross border and internal transactions in foreign currency, we intend to put in place a comprehensive International Transactions Reporting System (ITRS). Meanwhile, as there are no clear provisions under the FEA to combat unauthorised and unlawful activities involving foreign exchange, several enforceable sanctions are expected to be introduced into the FEA to enable the Department of Foreign Exchange to strengthen its surveillance of unauthorised foreign exchange market activities.