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

and reduce employment throughout 2002. despite the reduction in business investment, significant improvements in efficiency allowed firms to meet their sales and production goals without having to add workers. these improvements seem to have been the result both of organizational changes in business operations and of innovations in the use of existing technologies, perhaps the result of firms applying more effectively the new technologies they had acquired at a rapid pace in the late 1990s. in 2003, the recovery took hold : the pace of consumer expenditures stepped up, and housing activity boomed. these developments were supported by a pickup in personal income growth as job losses abated and hourly compensation moved up, as well as by rising stock market and housing wealth. in addition, the caution and uncertainty that had weighed on businesses began to dissipate, and investment turned up in the spring. a marked increase in capital spending in the second half of last year was spurred by significantly improving profits, low interest rates, and investment tax incentives. nonetheless, the recovery remained “ jobless ” until the fall, when growth in private employment began to resume. output in the first quarter of this year continued to expand at the robust pace of 2003, and employment gains picked up sharply. however, economic activity hit a soft patch in the late spring : the growth of real gross domestic product slowed to an annual rate of 3 - 1 / 4 percent in the second quarter after posting a 4 - 1 / 2 percent average pace in the first quarter of this year and over the four quarters of 2003. the second - quarter slowing was particularly evident in consumption, which was nearly unchanged on average between april and june. furthermore, job gains in the private sector, which had averaged close to 300, 000 per month between march and may of this year, slowed to about 100, 000 per month on average during the summer. economic developments this year have undoubtedly been influenced by the steep run - up in oil prices from about $ 30 per barrel for west texas intermediate crude oil in december 2003 to a record level of $ 55 per barrel this past october. this rise in energy prices clearly has had a negative effect on the real purchasing power of households and has raised business costs. nevertheless, the united states is probably less vulnerable to this year ’ s oil price shock than it was to the shocks of the 1970s and early 1980s, both because energy represents a smaller share of household purchases and business input costs than in those earlier periods and because the higher oil prices reflect, in part, stronger growth in the rest of the world, which