Sri Lanka can stop inflation with currency board: Steve Hanke

Sri Lanka's Prime Minister Ranil Wickremesinghe arrives with flowers to receive blessings at the Gangaramaya Buddhist Temple, Colombo, Sri Lanka on Wednesday 4 April 2018. On wednesday (4), Wickremesinghe survived a no-confidence motion in the Sri Lankan parliament with a 46 vote majority after a 12-hour debate with 122 MPs voted in his support while 76 MPs voting to remove the prime minister. (Photo by Tharaka Basnayaka/NurPhoto via Getty Images)

Feb 02, 2008 (LBO) – Sri Lanka could end inflation by adopting a working exchange rate system and a credible external anchor in the form of a currency board, a top international monetary economist has said.

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In 2007 Sri Lanka’s official inflation hit 18.8 percent despite a target of single digit inflation based on reserve money programming. However, the index that the target was originally based on grew only 16.4 percent.

This year 10 to 14 percent inflation has been promised by the Central Bank.

Haunting Spectre

“The spectre of unanchored inflation haunts the Sri Lanka economy,” Steve Hanke, professor of applied economics at Johns Hopkins University wrote in his column in the latest issue of GlobeAsia magazine.

“Indeed, in light of the huge fiscal deficits that have been recorded year-after-year and with the civil w