Sri Lanka's President on Thursday invited Tamil Tiger rebels to resume stalled peace talks and end the escalating violence, which has claimed more than 3,300 lives since he came to power a year ago.
President Mahinda Rajapaksa asked the Liberation Tigers of Tamil Eelam to resume negotiations during his speech to parliament on the 2007 budget, which sees a 45 per cent increase in the country's defence spending next year.
Rajapaksa told parliament he was grateful to the international community for their efforts to help revive the island's peace process and end a new spiral of violence since he came to power in November last year.
He said the rebel LTTE resumed hostilities a few days after he became president and blunted his economic development program for the island's 19.5 million people, the majority of whom are Sinhalese.
"A few days after I became president, they resumed hostile activities," the president said of LTTE rebels fighting for a separate homeland for minority Tamils.
"We are deeply committed to peace... We are ready to consider all reasonable solutions to the minority issues.
"Only the LTTE has not accepted this so far. I invite them to lay down arms and join the democratic system, enter talks," he said.
He said the government supported efforts of foreign donors to revive the stalled peace process.
Official figures show that more than 3,300 people have been killed in the past year despite a truce that has been in place since February 2002.
Peace talks between the government and the Tamil Tigers collapsed last month amid fears that the country could slip back to full-scale hostilities.
The drawn-out conflict has claimed since 1972 over 60,000 lives.
Rajapaksa, who is also the finance minister, is presenting the 2007 budget amid an International Monetary Fund warning that escalating violence could prompt an economic crisis.
Budget estimates placed before parliament projected defence spending would jump to 139.55 billion rupees (1.29 billion dollars) in the 12 months to December 2007 from an estimated 96.21 billion rupees in 2006.
But the drain on spending on the conflict was apparent even before the flare-up in violence last December.
The 2006 deficit is projected at 9.1 per cent of gross domestic product, up from 8.7 per cent the previous year.
The deficit for 2007 is estimated at 7.5 per cent of GDP.
The ethnic conflict along with rising global oil prices has pushed inflation to a forecast 12 per cent for 2006 from 3.6 per cent last year, the government said. In October, inflation stood at 17.2 per cent.