Sri Lanka unveiled a 16 billion- rupees ($141 million) stimulus package that includes cutting fuel prices and removing some taxes saying it is needed to stimulate the economy in the face of a global economic downturn.

The Sri Lankan government took control of a private bank saddled with bad debt declaring that the action was required to ‘maintain the stability of the financial system’.

The political head of LTTE in an interview with Reuters admitted the organisation had faced some setbacks in the war, but said their options for fighting back included sabotage against Sri Lanka's $32 billion economy.

The Sri Lankan rupee fell 0.9 percent on Monday, December 29, hitting a record low of 113.80/114.00 per dollar, surpassing the previous low of 113.45/113.55 on September 19, 2007.

Foreign remittance, Sri Lanka’s top foreign exchange earner, is suffering as tens of thousands of Sri Lankans employed over seas are laid off due to the global financial crisis.

The Sri Lankan government says it has formally outlawed the Liberation Tigers of Tamil Eelam.

Describing several recent escalation in incidents where Sri Lanka Armed Forces have targetted Tamil civilian during festive days between Christmas and Thaipongal, TNA, in a press release said that the "stringent economic, food and medical embargos on the war affected areas, ... are not only War Crimes in contravention of the Geneva Conventions but are also a part of a policy of Genocide that the Sri Lankan State has been carrying out against the Tamil people."

Politicians and activists across Tamil Nadu have expressed their opinion that the Sri Lankan state is engaged in genocide against the Tamils on the island.

Living in constant fear, the Tamils are considered fugitives in Sri Lanka

Showing utter disregard to the sentiments expressed by the leaders and people of Tamil Nadu following the occupation of Kilinochchi by the Sri Lankan security forces, the Congress party asked Sri Lanka to hand over LTTE leader Pirapaharan if he is caught so that he faces trial for the assassination of former Prime Minister Rajiv Gandhi.

“So,” said the driver as we settled into our seats for a four-hour ride to our resort in Sri Lanka’s tea country, “Do you think the economic crisis will get better in 2009?”

The year 2008 may well go down in history as a watershed in which the global financial crisis, precipitated by the collapse of Western economic models, ‘decolonised' Asians minds, say observers.

The Sinhala people in the south celebrated the occupation of Kilinochchi town by the Sri Lankan security forces by taking to the streets in large numbers waving flags and lighting firecrackers across towns and villages in the south of the island.

Political parties in Tamil Nadu took out their anger on the Congress led central government for the fall of Kilinochchi and condemned it for the inaction over the issue even after an unanimous declaration by the State Assembly of Tamil Nadu demanding immediate ceasefire in Sri Lanka.