COLOMBO (AFP) -- Sri Lanka unveiled its biggest ever war budget on Wednesday as the government intensified its military campaign to crush Tamil Tiger rebels.

President Mahinda Rajapakse, who is also the island's finance minister, began presenting his budget for the fiscal year starting January 1, 2008 to the 225-member national assembly.
He said the rebel Liberation Tigers of Tamil Eelam (LTTE) did not appear interested in a negotiated settlement to the island's drawn out separatist conflict and must be crushed -- and that peace can only come after more fighting.
""It is essential to completely wipe out terrorism,"" the president told parliament. ""Otherwise there can be no political solution.""
Provisional figures presented in parliament earlier showed that defense spending in calendar 2008 would total 166.44 billion rupees ($1.48 billion), up from an estimated 139.4 billion rupees in 2007.
The defense spending amounts to nearly a fifth of total government expenditure estimated at 925 billion rupees ($8.22 billion) next year.