A top Donor warned the government that aid and investment flows would dry-up if progress is not made in peace talks. Escalating tension between the LTTE and the government has spilt over to killings and bombings in the eastern province and Colombo.
The biggest donor to the country Japan said these incidents have a negative effect on aid and investment.
The government's top peace negotiator told Sri Lanka's donors, a difference in the approach to the agenda has stalled progress in peace, but was confidant that problems can be overcome through skillful negotiation.
"Now we are being accused of causing and perpetrating the Karuna problem," said Jayantha Dhanapala, Government Peace Secretariat.
The long pause in talks has created distrust and allowed other factors to create tension according to the head of the government's peace secretariat.
Jayantha Dhanapala, a former UN diplomat now heading the peace secretariat, was speaking at a workshop to present the government economic plan to donors.
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