COLOMBO. Dec I I Sri Lank.i is preparing for a crucial meeting ol its international donors with a promise of peace as the economy is buffeted by ever-escalating military spending that is steadily draining foreign reserves. says AFP.

The Paris aid consortium meeting which has been de-laved by over a year is finally sei lo meet next week and review the island’s economic political management amid un-prccedenled defence expentli-

ll is not going to be a pledging conference, but ihe meeting is crucial Im Sri Lanka to get ihe support ol the international eommunllv. finance ministry officials said.

Sri Lanka’s deputy finance minister G L, Peiris has been preparing (he ground here, meeting Colombo-based diplomats and outlining the lalesl peace moves that arc expected to figure (u Paris

Peiris told diplomats the government was trying In

"reu* li some understanding" with ihe rebel Liberation Tigers <•1 Tamil Eelam iLTTE) to cud decades of fighting that has claimed over 60.000 lives

Officials said the centrepiece ot Colombo's presentation will be the Norwegian-backed attempts to open a dialogue with the Tamil Tigers and (he government's radical constitutional

Attempts by the Tigers lo wrest back the northern peninsula ol Jaffna in April and May saws the government jiour uni-lions ol dollars in new mililarv hardware to stall the rebel offensive

The LTTE was prevented from faking hack Jaffna, but (he country s balance sheet appears in tatters Defence spending has overshot targets by nearly two thirds.

The budget ilchcil is expected lo widen to $.7 per cent ol gross domestic produci this vear compared to an original target of 7.5 pei cent. Peiris noted.

The effect of the budget crisis is already being tch in the

Bank interest latcs zoomed to 28 per cent Thursday with short-term lending rates going beyond 30 per cent In sharp contrast to the ofikral estimate of inllaiion that is said to he running at an annual 5.5 p'r cent in November.

The eentral bank figures appear wry impressive, said a diplomat who heard Peiris say Sri l^mka s larcji the best economically in South Asia.

But (he signals from the market place atnl tin business i ominiinnx 'Uggt (h< trarv ’ an Asian' dtplnmat said.

I am iivine lo figure om how nill.Uioil < an be so low while intrresi rates are five or six limes higher

Lalesl central bank figures show ihe economy grew h\- an Impressive 6.5 per cent in ihe first nine months of the war compared to the corres|lending period last year