MonitorsPublished on Feb 24, 2008
The tiny nation's economy has become yet another victim of the protracted ethnic conflict between Tamils and Sinhalese. This week, Standard and Poor credit rating agency has downgraded the rating of Sri Lanka from 'stable' to 'negative' reflecting concerns about the weak fiscal consolidation efforts and the unfavourable trends evident in the country's debt profile.
South Asia South Asia Weekly 7

Sri Lanka
< class="maroontitle">The Economic Downturn

The tiny nation’s economy has become yet another victim of the protracted ethnic conflict between Tamils and Sinhalese. This week, Standard and Poor credit rating agency has downgraded the rating of Sri Lanka from ‘stable’ to ‘negative’ reflecting concerns about the weak fiscal consolidation efforts and the unfavourable trends evident in the country’s debt profile. The international agency also warned that the negative rating of ‘B+’ could further be downgraded if the budget fails to fulfill its promises. Actually, it was only last year that the Standard and Poor had upgraded the rating of Sri Lanka. The abrogation of CFA and renewed hostilities on both sides might have propelled S&P to take such an action.

However, on a plus side the World Bank affiliate International Finance Corporation has signed a standby loan agreement for US $75 million with John Keells Holdings at the interest rate lower than what the government is paying for loans borrowed from the other commercial debt markets oversees. Central Bank has also reported that Sri Lanka has reported the highest ever earnings from its exports to the tune of US $ 863 million for the year 2007. The increase is 22.7% when compared with that of previous year. The major contributions came from apparel and the agricultural sectors. Some private sector companies also proved resilient and despite various odds, recorded a commendable performance to their credit.

Not much progress can be seen on the war front as it really seems that the war is heading for a stalemate. Though the death toll is undeniably on a higher side for the LTTE, the fact remains that the Sri Lankan forces are still inching and not marching rapidly towards their intended targets. Amidst all the fighting and chaos, one thing is certain that the LTTE is fast loosing popular support for its policies and agendas as more and more civilians are fleeing from the rebel-held territories to the Sinhalese dominated areas in the South. Some international humanitarian agencies operating in the LTTE controlled areas has also exposed the heinous activities of the Tigers which includes forcing school going children and adults past their prime to provide blood for their fighting units.
Source: Daily Mirror, Daily News, The Island, The Hindu, The Hindustan Times, Times of India,,,,


This week saw a major crack down on the Islamic militancy in Bangladesh. In a major success, security forces on February 16 arrested two top leaders of the banned Islamic militant outfit Harkat-ul-Jihad al Islami (Huji), who were accused of carrying out the grenade attack on the rally of Sheikh Hasina, the former Prime Minister and Awami league chief on August 21 2004.  Security forces also recovered a huge amount of grenades in Sathkira in the southwestern part of the country. The information was provided by these arrested militants. 

Meanwhile, intelligence agencies were suspecting that a huge amount of arms and ammunition had been smuggled into the country by the Islamist militants organisations mainly Huji and have been distributed all across the country. The Islamist militants are believed to have collected grenades and other ammunitions from Pakistan and separatist groups of India. A top intelligence officer said that ultimate destination of the grenades is the Indian Islamist militant.  Intelligence agencies came to know about this from the interrogation of the arrested Huji militant.  The intelligence official pointing to the seizure of huge amount of grenades from the bordering district of Sathkhira said that the grenades were taken to the bordering village so that it could easily be smuggled into India. The intelligence agencies also accepted the link between the Pakistan’s Islamic militant organizations and Bangladesh’s militant outfits. This revelation is very significant, as India for long was complaining of a linkage between the Islamic militant organizations of Bangladesh and Pakistan and their communication with the separatist and fundamentalist militant organizations of India.
In another development, three top leaders of Islamic militant organization, Jamaatul Mujahidin Bangladesh (JMB) were sentenced to death by a court this week. They were convicted of killing eight innocent people by blasting bombs in the office of a socio cultural organization in December 2005.

In the political front, breaking silence about the government’s intention of handing over power, Dr. Fakhruddin Ahmed, Chief Advisor of Bangladesh’s Caretaker government on February 18 said that his government is advancing towards attaining its goal of transfer of power to a democratic government by holding a fair, neutral and credible election.  
Source: The Independent (Monday, February 18, 2008)/ The Independent (Monday, February 18, 2008)/ The Daily Star (Tuesday, February 19, 2008)/ The Independent (Tuesday,
February 19, 2008)
< class="maroontitle">Terai crisis may delay elections

The continuing crisis in Nepal’s Terai region poses a serious challenge for holding of timely elections to the Constituent Assembly (CA). The week-long general strike called by the United Democratic Madhesi Front (UDMF), an alliance of three Terai parties, Madhesi Janaadhikar Forum (MJF), Terai-Madhesh Loktantrik Party (TMLP) and Sadbhawana Party (SP) has only aggravated the situation. The UDMF has been pressurising the government to address six of its major demands, including, a separate Madesh province with right to self-determination. They threatened to boycott elections if their demands are not met. Subsequently, the Federal Republican Front (FRF), an alliance of ethnic groups in eastern hills has launched agitations pressuring for their demands. Apparently, the two separate agitations is Terai, has raised serious doubts of holding the elections on stipulated time.

The strike has adversely affected normal life in the region and Kathmandu valley. Many of the industries located in Terai have closed down due to shortage of raw materials. Most of the educational institutions have shut down and transport remained off road. The supply of basic necessities has been largely affected due to blockade of vehicular movement. There is an acute shortage of fuel and this impacted vehicular movement in Kathmandu. There are also stray incidents of violence and clashes reported between security forces and demonstrators in different parts of Terai.

The FRF’s acceptance to sit for talks has given some respite to the government. The government tried hard to strike a deal with UDMF leaders to hold elections on time. Prime Minister Girija Prasad Koirala and Seven Party Alliance (SPA) leaders invited UDMF leaders for talks. This week, a series of meetings took place between UDMF and SPA leaders to find a political outlet. The government assured UDMF leaders that elections will address most of their grievances. Initially, the Madhesi leaders responded positively to government’s offer. However, the talks did not yield any results and the UDMF decided to continue with their agitations. Though, the government and other parties are gearing up for elections but the security and election scenario in Terai does not look favourable. Even, the Rastriya Prajatantra Party (RPP-Nepal) has decided to boycott the April 10 election.  It is obvious that elections will not take place if, the Terai parties continue with their agitations and security situation does not improve.

< class="maroontitle">Opposition – a House Divided

As the date of the forthcoming Presidential elections is approaching fast, the fissures began to appear within the opposition ranks. This week, Chairman of the main opposition party MDP Mohammed Nasheed ‘Anni’ resigned from his party post to become his party’s official candidate for the post of the Head of the State. On the other hand, MDP’s president Dr. Munawwar has also expressed his intention to become MDP’s official candidate for the Presidential post. A week ago, the resignation of MDP’s acting president and Vice President Zaki to do social service instead of playing politics speak volumes about the internal discord and disunity prevailing in the ranks of the opposition alliance. While age and the fact of not being in the Gayoom’s cabinet even once are working in favour of Anni, other’s claims are as strong as that of Anni’s. The internal bickering are weakening the National Unity alliance which in turn will help none other then their main opponent against which they all are putting up a united front i.e. – Maumoon Abdul Gayoom.       
Source: Minivan News, Miadhu, Haveeru, Maaloafaanu,

< class="maroontitle">Contributors:

      • Anjali Sharma                 –  Sri Lanka, Maldives
      • Joyeeta Bhattacharjee –  Bangladesh
      • Paul Soren                       –  Nepal, Bhutan



The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.