IMF, WB tells Sri Lanka to end bloodshed

Singapore, September 20 :

Sri Lanka has shown economic resilience but needs to end violence to restore much-needed business confidence, the World Bank and IMF said on Wednesday.

The South Asian nation forecasts a blistering 8.0 per cent growth this year, the biggest in nearly three decades, despite soaring violence that has claimed more than 1,500 lives since last December. “The economy has shown resilience so far, but prolonged uncertainty would affect business confidence and macroeconomic performance,” Wanda Tseng, the IMF’s deputy director for Asia-Pacific, said during the International Monetary Fund and World Bank annual meetings here.

Sri Lanka’s Central Bank, which is forecasting a growth rate of seven to eight per cent this year on the back of a 7.9 per cent growth rate in the first half of the year, did not factor in the prospect of full-scale war. Sri Lanka’s Oslo-arranged 2002 truce is under severe strain following a new surge in violence but peace broker Norway expects to bring the Sri Lankan government and the rebel Liberation Tigers of Tamil Eelam (LTTE) to the negotiating table early next month.

“There is no choice for Sri Lanka, but to pursue peace,” the World Bank’s South Asia Region vice president, Praful Patel said. “There will be tough times along the way, but the path to development and prosperity for Sri Lanka can only be built on a solid commitment to peace and a realisation of that commitment by all citizens.”

Sri Lanka’s Central Bank governor Nivard Cabraal, attending the annual meetings of the Washington-based international lenders, said high oil prices are a bigger worry for policymakers back home.

A net oil importer, Sri Lanka expects to pay two billion dollars this year for oil purchases.