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Sri Lanka’s Central Bank says IMF inflation study is wrong

April 09, 2008 (LBO) – Sri Lanka's central bank has strongly disputed findings in an International Monetary Fund study, which went against official claims that the island's record high inflation was mostly caused by foreign factors. The research study came amid calls for fundamental monetary reform in the island.

In March inflation hit 23.8 percent on a controversial new index from which an entire expenditure group was dropped while an older index showed 28.1 percent inflation.

Sri Lanka had already suppressed a country-wide index which showed 26 percent inflation earlier.

Economists and financial analysts have been calling for the abolition of the Central Bank and a return to a currency board arrangement or legislated inflation targeting and full independence for the monetary authority.

Critics have blamed the central bank for creating high inflation, depreciating the currency and de-stabilizing the economy since it was created in 1950 through loose monetary policy and financing government deficits.

The full statement from the Central Bank is published below.

IMF Study on Pass-Through of External Shocks to Inflation in Sri Lanka

In the recent past, several news media have quoted from a w

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