loans societies, ten major superannuation funds and six life insurance companies. over the last two years, two commercial banks were sold and amalgamated into the operations of the other two existing banks. in line with its new powers under the bfia 2000, the central bank initiated enforcement actions against a number of institutions, including the former government owned commercial bank and finance companies, in an attempt to rectify problems that threatened depositors ’ funds or the overall stability of the financial system. the central bank also instituted care - taker management for a few large savings and loan societies under the savings and loan societies act, and liquidated 76 dormant societies as part of its revitalisation programme. legal action was also taken against several fast - money schemes that continue to solicit deposits from the public. new initiatives the bank issued new standards on foreign currency exposures on 28 september 2001, setting a limit of 10 percent of bank capital for any single foreign currency exposure, and 15 percent of capital for total foreign currency exposures. the new standard also requires banks to report their exposures each day to the central bank in electronic format. the bank is reviewing the existing prudential standards ( i. e. regulations ) covering capital adequacy, large exposures, and asset quality and provisioning that applies to banks and finance companies, with the ta from the imf. these prudential standards have been reviewed and implementation will take commence in 2003. new polices are now being drafted to place limits on shareholdings and market share of the banks. 3. latest economic and outlook for 2003 economic growth preliminary estimates of economic activity indicate that real gdp declined by 0. 5 percent in 2002, following a revised decline of 3. 4 percent in 2001. the decline was due to the continued depressed levels of activity in the mineral, building and construction, retail and wholesale, and electricity, gas and water sectors. for 2003, real gdp is projected to increase by 1. 8 percent with growth in both the mineral and non - mineral sectors. the agriculture / forestry / fisheries sector is forecasted to grow by 2. 9 percent in 2003, reflecting increased production of all agricultural export commodities. balance of payments preliminary balance of payments data for 2002 showed an overall deficit mainly reflecting a widening current account deficit, due to lower merchandise exports of most agricultural commodities, gold, copper, crude oil, forestry and marine exports, combined with higher imports and net service payments. the level of gross official reserves at the end of

##rtify, based on internationally - accepted accounting standards, that the financial statements of the entities are accurate – that is, it is a “ true and fair view ” of the institution ’ s financial position for the period in which such statements are prepared. although the auditor ’ s report is normally intended for the shareholders, the acts that the bank administers, including the banks and financial institutions act, superannuation ( general provisions ) act, life insurance act and savings and loans societies act, require the auditor to report to bank on any matters where the auditor has reasonable grounds for believing that the institution is insolvent, at significant risk or the state of affairs of the financial institution will materially affect depositors, policyholders, and contributors. the auditor ’ s opinion helps to establish the credibility of the financial statements, and the bank, as the supervisor, would normally rely on this opinion and use the accounts to verify and complement the periodic financial reports received from the financial institutions. the bank, as the prudential supervisor of licensed financial institutions, also wants to see the role of external auditor extended to include conducting compliance auditing. the bank would like to see licensed financial institutions attest their internal control systems, conduct checks and balances on the governance structures, and issue comprehensive disclosure statements, including disclosures along a number of risk dimensions, and be approved by the external auditors. this should assist license holders to comply with the prudential requirements of the acts. in summary, the bank would like to have a tri - partite approach in the supervision of the licensed financial institution, which is important for fostering closer working relationships, particularly with the external auditors. consequently, auditors will require better understanding of the supervisory concerns in order to help them perform their audit functions and thus report adequately on those requirements. an example of such arrangement is the tri - partite meeting arrangements between the bank, financial institutions licensed under the banks and financial institutions act and their external auditors, where the licensed financial institutions are required to provide a statement on compliance on all prudential standards and fx limits, a declaration by the ceo, endorsed by the board on whether the board and senior management have identified key risks facing the bank, established systems to monitor those risks and whether those systems are operating effectively and are adequate having regard to the risks they are designed to control. the external auditor shall provide to the bpng a report on their opinion whether the bank has complied with all specified prudential standards and