Despite inflation worries, the Sri Lankan Central Bank decided to maintain Repurchase rate and the Reverse Repurchase rate at 7.00 per cent and 8.50 per cent, respectively to propel growth.

The bank's Monetary Board, which reviewed the Monetary Policy on March 7, noted that inflation, which remained between 5-7 per cent since July 2010, increased to 7.8 per cent in February 2011. This was due to the increase in prices of food items, especially vegetables, following short-term supply disruptions caused by floods in major food producing areas.

The bank noted that the galloping prices of key international commodities, particularly crude oil, was an area of concern.

It added that the possible impact of these external price pressures on macroeconomic stability was being closely monitored and appropriate measures will be taken if clear signs of persistence of these adverse developments emerge.

The cumulative earnings from exports recorded a historic high in 2010.

There was also a huge growth in import expenditure.

Increased worker remittances and earnings from tourism as well as high inflows to the financial account resulted in a surplus in the overall balance of payments in 2010.

The gross official reserves continue to remain satisfactory.

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