Deadlock in peace talks compounds Sri Lanka’s economic woes

The latest failed attempt to revive peace talks is bad news for Sri Lanka’s economy, already in trouble from high inflation, a foreign exchange crisis and a falling rupee. The latest failed attempt to revive peace talks is bad news for Sri Lanka’s economy, already in trouble from high inflation, a foreign exchange crisis and a falling rupee. Sri Lankans were banking on a fresh initiative by peacebroker Norway to end a 19-month deadlock between the government and Tamil Tiger rebels and bring much-needed foreign aid.

But Norway’s bid ended without a breakthrough Friday, although the government and rebels promised to maintain their fragile truce.

“Kickstarting the peace process and bringing back lost confidence is vital for the economy,” said Hasitha Premaratne, research head at HNB stockbrokers.

International donors have pledged 4.5 billion dollars over four years to rebuild the war-ravaged nation but the talks impasse is delaying release of the promised aid, diplomats said.

Japan’s special peace envoy Yasushi Akashi, who helped win the pledges at a donors’ conference in Tokyo in June 2003, has said the talks deadlock is slowing aid flows.

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