Prime Minister Ranil Wickremesinghe presented a bleak outlook for the Sri
Lankan economy on Thursday, saying the high cost of fighting the Tamil
separatist war had bloated the deficit and slowed growth.
``Even if peace dawns and no shot is fired thereafter, we will be paying for
our military purchases until 2008,'' Wickremesinghe said in an address on
state-run Rupavahini television.
He said the government had 13.6 billion rupees (dlrs 141 million) in
outstanding loans for military purchases
``I may become unpopular because I speak the truth, but that's not a problem
to me,'' Wickremesinghe said about critics who accuse his administration of
doing little to bring down the rising cost of living.
Wickremesinghe, whose party won the December 2001 parliamentary elections,
has signed a cease-fire agreement with rebels of the Liberation Tigers of
Tamileelam, bringing a halt to fighting for the first time in seven years. The
government has scaled down arms procurement.
The previous Peoples' Alliance government had bought the latest weaponry from
Israel, Pakistan and China on credit to counter a Tamil Tiger onslaught in the
northern Jaffna Peninsula in 2000.
The rebels say the Sinhalese majority discriminates against the 3.2 million
Tamils in this island nation off India's southern coast.
Wickremesinghe won the election promising to end the conflict and improve the
In his address, he said the country had experienced negative economic growth
for the first time in 2001, when debt surpassed national income and the
government's interest payments exceeded its revenues.
The government hopes to narrow the budget gap by using revenue from
privatization of state-run firms to repay debt, Wickremesinghe said. It also
aims to trim the budget deficit from 10.8 percent of gross domestic product in
2001 to 5 percent in 2005, he said.
The government hopes to achieve 3.7 percent growth in national income this
year, after suffering a 1.4 percent drop last year, the prime minister said
without elaborating on his strategy.
The Sri Lankan economy grew by a marginal 0.1 percent in the first quarter of
2002, according to provisional figures issued by the central bank.