Sri Lanka to Boost Investment in Tamil Provinces Devastated by Civil War

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09 November 2009


Sri Lanka plans to pour development money into Tamil-dominated provinces that suffered economically during years of civil war. A Sri Lankan cabinet minister spoke at the World Economic Forum's India summit.


Sri Lankan government officials are predicting the island nation's $41 billion economy will expand between seven and eight percent next year.

Larger prospects for growth are being proclaimed by government officials after this year's defeat of the Tamil Tiger rebels, which brought an end to a quarter century of civil war.

A group of the island's top business leaders is visiting New Delhi to entice more of their Indian counterparts to invest in Sri Lanka.

India is already Sri Lanka's top source of imports, totaling $3.5 billion annually. But analysts say foreign direct investment is hampered by high corporate taxes and a legacy of socialist-era policies and bureaucracy.  

Sri Lanka's Minister of Public Administration and Home Affairs, Sarath Amunugama, says the government has taken a policy decision to develop the Tamil-dominated provinces which, for years, were effectively controlled by the now-defeated rebels.

"It is only fair that we do that because that area has not seen growth for three decades," Amunugama saud, "And, if I may put it that way, a disproportionately large part of the forthcoming budget would be allocated for growth in the North and East."

United Nations officials say about 40,000 Tamils have returned to their villages in the past two weeks under Colombo's resettlement plan. But more than 160,000 are still in displacement camps.

They fled this year's fighting between government troops and the Liberation Tigers of Tamil Eelam. The rebel group failed in its violent quest to establishment an ethnic homeland on the island, which is dominated by the mainly Buddhist Sinhalese.

Despite a doubling of its gross domestic product in the past five years, Sri Lanka still requires foreign aid and loans.

Amunugama, who is also the deputy finance minister, says the United States and the West have been supplanted as the primary aid donors by India, China, Japan, Iran and Arab countries, including Libya.

The International Monetary Fund last week released the second payment of a controversial $2.6 billion loan to Colombo.

The United States, which has the largest voting share on the IMF's executive board, was seen as attempting to delay the huge loan to pressure Sri Lanka to address human rights issues in the country.

The United States and European Union are among the voices in the international community still pressing for accountability for thousands of civilian deaths at the end of the Sri Lankan civil war.

The Colombo government has denied any war crimes were committed by its forces and is promising to investigate. It also accuses the defeated rebels of deliberately firing upon or using as human shields terrified civilians who tried to flee the fighting during the government's final offensive.