Sri Lanka’s economic exuberance wanes

COLOMBO, May 15, 2013 (AFP) – After crushing Tamil rebels four years ago Sri Lanka expected to become South Asia’s tiger economy, but exuberance has given way to mediocre growth and fears of more trouble ahead. The country was almost broke when troops defeated separatist Tamil Tigers in May 2009, but Colombo predicted that ending 37 years of bloodshed alone would jump-start the economy and make Sri Lanka the “Singapore of South Asia”.

“Sri Lanka had a sudden opportunity at the end of the war, but we failed to leverage that,” said opposition lawmaker Harsha de Silva. “Our policies were not conducive to attracting global investor attention.”

De Silva, who is also an economist, said the government’s reliance on state enterprises and the renationalistion of several privatised ventures in 2011 was a “knockout punch” that discouraged investors.

The record 8.0 and 8.2 percent growth rates in the first two full years after the war gave way to a much slower 6.4 percent last year — slower than during some of the war years.

The government has predicted growth of around seven percent for 2013, but sources in the International Monetary Fund say that is too optimistic.

The IMF, which bailed out Sri