, Sri Lanka plans to announce a war budget Nov. 16 in which it will hike defense spending next year by 45 percent amid a spiralling conflict with separatist Tamil Tiger rebels, officials say.
The budget comes against the backdrop of an International Monetary Fund warning Nov. 14 to Sri Lanka that the escalating violence could prompt an economic crisis with surging inflation and dwindling foreign currency reserves.
Despite the upsurge in fighting that has claimed over 3,300 lives since December, the economy was forecast to expand by more than 7 percent in 2006 and more than 8 percent in the coming year, government officials said.
