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Sri Lanka’s post-war boom accelerates

[AFP, Wednesday, 9 June 2010 08:32 No Comment]

Sri Lanka’s central bank raised its growth forecast for the year on Wednesday, citing strong post-war expansion in reconstruction and agriculture, particularly in former conflict zones.

The bank tipped the economy to expand seven percent in 2010, higher than its previous prediction of 6.5 percent and a sharp rise on the 3.5 percent recorded in 2009.

"We are seeing growth in virtually all sectors, after the war ended," central bank governor Nivard Cabraal said, referring to the end of fighting between government forces and Tamil separatist rebels in May last year.

Sri Lankan troops crushed Tamil Tiger forces in their strongholds in the east and north of the island, ending the 37-year conflict that claimed up to 100,000 lives according to United Nation figures.

"Economic activity in the north and east is picking up in areas like farming, fishing, construction, dairy produce, banking and telecommunications. 2010 will be a good year," Cabraal said.

Cabraal, who ended Tuesday a two-day visit to the island’s north, said banks and financial services were clamouring to open up branches in the area.

"The banking financial sector is keen to tap the vast deposit base as well as the foreign remittance market. A lot of diaspora cash is coming into the northern and eastern regions to help relatives rebuild their lives," he said.

Sri Lanka earned over three billion dollars in foreign remittances last year, according to bank figures. The economy is worth 42 billion dollars.

Cabraal also said the central bank was in the process of evaluating two international banks who have sought to open branches in Sri Lanka. He declined to name them.

Annual inflation is hovering around six percent, while Sri Lanka’s fiscal deficit shot up to 9.7 percent of gross domestic product in 2009, above a 7.0-percent target set by the International Monetary Fund.

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