monetary policy, with the proceeds of the bonds sterilized in a blocked account at the central bank on behalf of government. notwithstanding the gradual pace of recovery, demand for imports of goods and services is quite robust, prompting the central bank to intervene consistently in the foreign exchange market. nonetheless, the country ’ s gross official reserves remain strong at us $ 9. 4 billion at the end of june 2013, or more than 10 months of import cover. economic outlook ladies and gentlemen, the recent up - turn in domestic economic activity, particularly in the non - energy sector, indicates that economic sentiment is gradually improving and becoming more widespread. bis central bankers ’ speeches perhaps the most fundamental downside risk to the country ’ s improving economic outlook relates to the actions of the two largest gas producers ( bptt and bgtt ), who are expected to continue major maintenance operations with significant shutdowns scheduled around september 2013. this is a high probability, high impact event. failure on the part of both the ministry of energy and energy affairs and these two energy companies to reach agreement on minimizing the very sharp supply disruptions in energy output would throw off track the economy ’ s current growth mode, resulting in close to zero growth or even contraction for the year as a whole. for its part, the central bank has been advancing a financial program of regulatory reform designed to ensure that a crisis on the scale of clico never happens again. i am adamant that marauders at the gate can never again breach the regulatory walls of our fortress at great cost to our citizens and to our economy. we are placing top priority on a successful passage of the insurance bill 2013, which was recently referred to a joint select committee of parliament. the bill introduces best practices in the areas of corporate governance, risk management, consolidated supervision and consumer protection to the insurance industry. among the measures brought by the bill will be the strengthening of the powers of the inspector of financial institutions of the central bank, which is legally empowered to oversee the operations of the insurance industry and also intervene in the sector where it becomes necessary. while challenges remain, a final resolution to clico ’ s failure seems to be on the horizon. such a development should positively impact economic confidence. with firmly anchored inflation expectations, the central bank is giving more weight to an accommodative monetary stance until a firm economic turnaround is established. however, should the outlook for inflation, growth, or financial stability change, we will take appropriate action. we

group ’ s assets. in this model, the flow of deposits and policyholders ’ funds, through rollovers and new business, masked the limited profitability of many of cl financial ’ s investments. then came the recent international crisis, methanol prices ( a major source of dividends ) declined ; real estate values plummeted and in a climate of uncertainty, the rate of roll - overs and new deposits slowed markedly. this led to liquidity and perhaps solvency problems, the real impact of which is now being assessed. i would want to suggest that the clico / cib crisis represents a case of “ systemic failure ” from which we all can take invaluable lessons. clearly we need to upgrade our legislation as a matter of urgency. it is hoped that the recent international financial crisis as well as the recent stresses in both the credit union and the insurance industry would convince industry participants of the need for modern legislation to cope with a modern financial sector. two, directors and management need to take seriously their fiduciary obligation to protect depositors ’ / policyholders ’ funds. independent directors have a special obligation to provide checks and balances and play a “ whistle - blowing role ”, if necessary. three, external auditors must also recognize their fiduciary responsibilities and must be held accountable. the self - regulatory bodies must set and enforce the highest auditing standards. that ’ s the legacy of enron and world com. four, as regulator we need to continue to upgrade our skills and quickly achieve the level of competence in the insurance and credit union regulations as we have achieved in bank regulation. of course, we have been in bank regulation for close to fifty years whilst we have only recently been doing insurance. the clico / cib crisis is a major setback for the financial sector in the region. we have been able to contain the contagion but the challenge of strengthening market confidence and ensuring that the cost to taxpayers remains minimal in the medium term is ongoing. the clico / cib collapse should be a lesson that serves to strengthen our financial system for the next several years.