With the view of enhancing the transparency and tradability in the secondary market, measures are being taken to introduce a new primary issuance system for Treasury bills. A distinct electronic trading platform, with a central counter party (CCP) arrangement for government securities, along with required legal 35  reforms to deepen and broaden the secondary market for Treasury bills and Treasury bonds, as well as a mechanism to disseminate secondary market information on debt instruments through the proposed e-trading platform and a clearing house are to be established. In addition, the Medium Term Debt Strategy (MTDS) is to be further streamlined with the assistance of multilateral agencies. Further, we will introduce amendments to the Local Treasury Bills Ordinance (LTBO) and Registered Stock and Securities Ordinance (RSSO) to ensure smooth and efficient functioning of the debt management system. In view of the increased volatility in global financial markets, we also intend to reduce the threshold for foreign investment in rupee denominated Government securities from 10 per cent of the outstanding Government securities stock at present to 5 per cent. Management of the Employees’ Provident Fund In discharging powers and duties vested with the Monetary Board in relation to the largest superannuation fund in Sri Lanka, Employees’ Provident Fund (EPF), the Central Bank has strived to improve the services provided to its stakeholders, while ensuring the enhancement of the return to members and the safety of the Fund. During 2018, the EPF continued its fund management activities to enhance returns by aligning the investment strategy with market conditions.
Nevertheless, the impact is quite uneven across banks, owing to differences in factors such as the composition of loans to the private sector and of the sovereign loan portfolio, their international presence and the coverage of the ICO guarantee programme. In particular, in the portfolios of loans to NFCs and sole proprietors, the impact varies considerably according to firm size and economic sector.33 Loans to individuals are also important, as in business in Spain they account for more than half of the total loan portfolio.34  33  The larger differential impact on smaller firms reflects their lower capacity to absorb shocks, as their sources of revenue and financing are less diversified. The reasons for the cross-sector differences include the distinct impact the energy price increase has on each sector, and also the differences in the sectors’ sensitivity to the macroeconomic downturn and in their initial financial positions. 34  The expected loss rates in the mortgage portfolio remain limited, owing to the nature of the loans and their associated collateral, and the scenarios therefore envisage a smaller impact for this business.