the region here. in this regard, the recovery of the economic situation in the euro area is good news for montenegro and the western balkans generally. links will grow as a result of the banking union which is being established in the eu. the new institutional set - up involves new responsibilities for the ecb, which became the banking supervisor of the entire euro area last november. the establishment of this single supervisory mechanism consolidates our relationship with the western balkans in view of the ownership structure of the banking sector. the ecb will at the same time become the home supervisor of a large part of the banking sector in montenegro and other countries in the region. the main reason, however, for our focus on the countries in the western balkans and their central banks is the prospect of eu membership. for one, the eu central banking community considers it important to support its sister institutions in this region as they seek to apply best practices for the benefit of their country and their people. this is also in the interests of all eu central banks as one day the central bank of montenegro will join the european system of central banks and, at that time, will need to meet all relevant standards and be able to function properly within the system. moreover, strong, stable and independent institutions are a prerequisite for sound macroeconomic policies and financial stability, which in turn are a condition for sustainable convergence. this is in the interests of montenegro but, again, also in the interests of the euro area and the rest of the eu. joining the european union and eventually the euro area is not an end in itself. they are a means to an end, namely to enhance the welfare of the member states and their citizens. in this regard, one of the key lessons of the recent crisis in the euro area is that in order to benefit from membership, countries need to achieve sustainable convergence. convergence must not only be reached in the run - up to joining. to sustain it requires constant policy efforts in the areas of fiscal, financial and, in particular, structural policies. bis central bankers ’ speeches pursuing growth - promoting structural reforms while maintaining financial stability and fiscal sustainability need to be key policy priorities for economic policy - makers in this context. this applies both prior to and after eu accession. the best contribution central banks can make is to ensure price stability and to remain focused on their mandate, while having a sound institutional framework that ensures their independence. there is one point that i would like to mention which makes the central bank of montenegro a special case

of appreciation of the rupee in 2017, indicating significant inflows to the foreign exchange market. sri lanka also received the fourth tranche of the extended fund facility ( eff ) of the imf in december 2017. a total of us dollars 759. 9 million has been received so far. this confirms sri lanka ’ s satisfactory performance in achieving imf - eff targets during 2017 in terms of specified performance criteria and certain structural benchmarks. earnings from exports increased owing to the recovery in key export markets, the central bank policy of maintaining exchange rate flexibility, conducive external trade policies and improved macroeconomic conditions of the country. further, the reinstatement of the eu gsp + facility, the expected conclusion of the free trade agreements with singapore, china and india and strong institutional and policy support are also expected to drive the momentum in exports. we have seen an increased inflow of foreign direct investment ( fdi ) in 2017 and we expect fdi to gain momentum through the commencement of the hambantota industrial zone and the continuation of the colombo port city project. higher inflows to the government securities market and the colombo stock exchange ( cse ) as well as long term financial flows to the government were also witnessed during the year. with these developments on the external front, the central bank was able to build official reserves of over us dollars 7. 9 billion at the end of 2017. on the fiscal front, the government has embarked on a revenue based fiscal consolidation path to strengthen the country ’ s public finances. the government expects to reduce the budget deficit to 3. 5 per cent of gdp by 2020 and thereby reduce government debt to a sustainable level in the medium - term. it is in the process of implementing several reforms aimed at improving government revenue collection while rationalising government expenditures to adhere to the envisaged fiscal consolidation path over the medium - term. a positive primary balance is expected in 2017 for the first time since the early 1950s and a surplus in the current account is also expected in 2018 for the first time since 1987. the reform agenda of the government includes improving financial viability of the state owned enterprises ( soes ) to mitigate the budgetary implications for the government. while introducing clear frameworks and reforms in relation to monetary and exchange rate policies in 2017, we have implemented several policy measures during 2017 to address the challenges in the financial sector and maintain a stable financial system for effective monetary policy transmission and to support sustainable growth. with a view to