In addition, it is also worth mentioning that fiscal measures, which help moderate the inflation path this year, will have countervailing effects when they are withdrawn, which could make the inflationary episode more persistent. Indeed, this is the main reason why our December projections revised inflation upwards in 2024 to 3.4%. Howev er, some of the measures approved by governments to shield consumers from excessive energy price increases take the form of price caps and, therefore, their effects depend on the magnitude of the energy increases. In a context of lower energy prices, the ceiling on prices may not become operative; the downward impact of these measures in 2023 would therefore be lower and, subsequently, the upward impact of their reversal in 2024 would be lower as well. The pass-through of euro exchange rate movements to inflation Fluctuations in the euro exchange rate have been significant in the last year. In particular, the euro-dollar exchange rate depreciated significantly in the first part of last year as a result,  6  Industrial pro ducer prices excluding energy and co nstructio n co ntinued to decelerate in December in the euro area to reach a gro wth rate o f 12.3% (3.7 pp less than at the peak last May).
In the years 2005 and 2006 three key laws were enacted, namely, The Convention on the Suppression of Terrorist Financing Act, The Prevention of Money Laundering Act, and the Financial Transactions Reporting Act. The FTR Act created the institutional body of the FIU within the Central Bank, with regulatory powers and a mandate, inter alia, to formulate policies and guidelines to meet the Financial Action Task Force (FATF) 40 + 9 recommendations. The enactment of the necessary AML/CFT legislation in Sri Lanka, early last year and the establishment of the Financial Intelligence Unit soon after, demonstrates Sri Lanka’s strong commitment to the global efforts to fight financial crime and terrorism. Naturally, therefore, in this effort, the areas of vulnerability have been identified and adequate measures taken to deal effectively with the weaknesses. The stakeholders also need to be adequately equipped to discharge their responsibilities effectively. We therefore, see today’s effort at building capacity and processes, as one of the most important pre-requisites for the implementation of an effective AML/CFT regime, and we commend the World Bank and all others who are involved in this endeavour. My dear friends, Sri Lanka has been ever mindful of its obligations in this regard and has been a pioneer in this field. Long before the advent of the AML and CFT legislation, certain safeguards to insulate our financial system from money launderers and terrorists were in fact put in place by us. This was done through legislation such as the Exchange Control Act, the Banking Act and the Customs Ordinance.