Accordingly, with the view of providing policy direction to the financial sector, the Central Bank is in the process of developing a ‘Road Map for Sustainable Finance in Sri Lanka’. For this process, we are obtaining the technical assistance from International Finance Corporation of the World Bank (IFC-WB) and financial assistance from the United Nations Development Programme (UNDP). Going forward, we intend to launch the ‘Road Map for Sustainable Finance’ during 2019 which would serve as a reference for all stakeholders in formulating their own sustainable finance policies. 32  4. Policies Related to Ancillary and Agency Functions In addition to our core functions, we have effectively performed several ancillary and agency functions as well. We have performed these functions to support the smooth functioning of the economy and the financial system, thus contributing to strengthen the broader economy. Currency Management The Central Bank has the exclusive right to issue currency notes and coins on behalf of the government. During 2018, we continued to perform this function as per our mandate. In spite of increased use of technology driven non-cash modes of payment, demand for currency notes and coins increased in 2018 in line with the expansion of the economy. In 2018, we launched a new coinage and issued a commemorative currency note and a coin. Further, we have introduced policy measures against willfully altered, defaced or mutilated currency notes in order to preserve the quality of currency notes in Sri Lanka.
Lower than expected revenue collection is likely to challenge the achievement of the targeted budget deficit for 2018. However, the primary balance is expected to record a surplus for the second consecutive year in 2018. This would be only the third time since 1955. Continued fiscal consolidation remains essential to build on the achievements already realised in the fiscal sector and to support the conduct of monetary and exchange rate policies without any fiscal forbearance. As announced in last year’s Road Map, the Central Bank is progressing towards implementing flexible inflation targeting (FIT) as its new monetary policy framework by 2020. We have taken several policy initiatives to facilitate the transition to FIT during 2018. While maintaining appropriate policy coordination 7  with the government, we initiated the drafting of necessary legal amendments to strengthen the mandate of the Central Bank to maintain low inflation, while strengthening its autonomy, transparency and accountability. During 2018, we were also able to implement several policy measures with a view to maintaining a stable financial system with subdued macroprudential concerns, while increasing the resilience of the financial system to global and domestic shocks. In order to strengthen the legal and regulatory framework of the financial institutions, a new Banking Act is being drafted, while also initiating amendments to other legislation related to the financial sector. Resolution actions for distressed companies were taken in the form of imposing stringent regulatory actions such as restriction on business as well as suspension and cancellation of licences.