Sri Lanka’s post-war boom accelerates

General Manager - Port Investment Services at HIPG, Justin Zhang with Sri Lanka's Ambassador to China, Dr. Palitha Kohona in Beijing

June 9, 2010 (AFP) – 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. 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.

The IMF released a 2.6-billion-dollar bailout package last July, but has already delayed releasing the third tranche of the loan after Sri Lanka failed to meet its budget deficit targets. 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 th