Sri Lanka: Civil War

Almost four years after its civil war ended, Sri Lanka is far from at peace over its recent history. President Rajapaksa has said the end of the war has brought peace, stability and the chance of greater prosperity to Sri Lanka. However, there have been numerous accusations of human right violations by the government , with David Cameron currently attempting to urge the government to  ensure an independent inquiry or face a UN investigation. The civil war lasted just over 25 years and has left a lasting impact on Sri Lanka. 
      One major effect during the war was large scale unemployment. The riots and fighting caused many shops to close from damage and people feared going to work.The unemployment left many people 
 unhappy and led to even more rioting against the government, with looting taking place at their place of work ; meaning the prospect of regaining their job was unlikely. This obviously would have led to a slowdown in aggregate demand as consumption  fell as people lost a source of income. Another economic effect of the war was a decline in investment.
         Infrastructure has been severely impacted by the war, as years of fighting have destroyed and neglected crucial parts of the country’s framework, which was further damaged by the 2004 tsunami.
       Foreign direct investment is key to economic growth in a developing country , and investors feared a loss or for their lives by investing in Sri Lanka.In addition, the country has been long a top tourist destination for the countries cultural heritage and beautiful landscape, however the war has meant tourist revenue for the country has also fallen, as people view it too dangerous.  The lack of money flowing in to the country means the government make less through tax revenue and thus their fiscal deficit worsens, as money is focused on the military rather than education and health which is required for development. In 2007, the government borrowed $181,449 worth of defence loans from international financial markets, virtually double the amount used in the previous year. In 2008, the Sinhalese government designated $1.5 billion for defence, a 20% increase from last year’s budget. This year, Sri Lanka expects to allocate $1.64 billion to  war efforts, a 6.4% year-on-year increase.  War costs currently consume around 30% of the government’s budget, and has been estimated to have cost the country over $ 200 billion over the years. 

Please take a moment to watch this video made by Ryan Mahendran and the Arrupe group.
http://www.youtube.com/watch?v=WRaHl7L1cgg