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 economy.
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.
