Sri Lanka political stability seen key to foreign investment

Oct 24, 2009 (LBO) - Post-war Sri Lanka's ability to attract foreign investments would depend on how the island resolves minority Tamil grievances, eliminates residual security threats and improves its finances, a World Bank report said. "The end of armed conflict provides Sri Lanka with a historic opportunity to achieve a dual transition from a low income country in conflict to a middle income country in peace," the bank's latest economic update on the country said.

"For longer-term stability needed to bolster the investment climate it would be necessary to address minorities’ underlying grievances."

Government forces defeated Tamil Tiger separatists in May, ending the 30-year ethnic war, and creating anticipation of an economic revival.

But underlying Tamil grievances on sharing political power that triggered the war remain unresolved leading to fears Tamil Tiger extremists might try to revive the conflict.

The World Bank report said that in terms of devolution of power to provincial councils, the Sri Lankan government has announced further devolution will only be considered after the forthcoming elections.

Parliamentary and presidential polls are anticipated next year.

The World Bank said that prelimi