Sri Lanka govt running out of time to fix economy: study

May 02, 2008 (LBO) – The Sri Lankan government is running out of time to fix the economy, with inflation out of control and other economic fundamentals steadily deteriorating, a new research paper on the economy says. With the regime of President Mahinda Rajapakse nearing its half term (by November 2008) and the parliamentary election only two years away, "time is running out to put the economic house in order," it says.

The deterioration in key economic indicators is likely to test the nerve of the economy at a time of heightened civil war, says its author, Muttukrishna Sarvananthan, principal researcher of the Point Pedro Institute of Development, Point Pedro, a think tank in northern Sri Lanka.

"Times are hard and challenging this year and beyond," he says in a paper on the economy of peace and conflict in Sri Lanka.

"Under the circumstance of inflation shooting over 20 percent for a prolonged period (with no sign of abatement), the present regime cannot play the counter-terrorism cum jingoistic card infinitely."

Sarvananthan was referring to the government's intensified military campaign against the Tamil Tiger separatists.

The campaign has succeeded in weakening the Tigers but a