Q+A: Is this the endgame in Sri Lanka's war?

By C. Bryson Hull

(Reuters) - Sri Lankan troops thrust into the last Tamil Tiger-held area as an exodus of at least 49,000 people from it gathered speed, and the Red Cross warned of catastrophe in the apparent endgame of Asia's longest-running war.

Here are questions and answers about what happens next on the Indian Ocean island:

WHAT HAPPENS NOW ON THE BATTLEFIELD?

On Tuesday, the military was advancing and expanding its control of the 17 square km (6.5 sq mile) no-fire zone, after troops on Monday breached an earth bund blocking the main route out of the area. It is all but certain this will be the final conventional battle of the 25-year-old war. It is a safe bet the military will replicate the tactics they have used around the edges of the no-fire zone. They will use snipers to pick off Liberation Tigers of Tamil Eelam (LTTE) rebels trying to block people from fleeing. In any case, the military has vowed no more truces. So a conventional defeat looks on the cards very soon for what has long been regarded by many as one of the most resilient and ruthless guerrilla groups.

AND WHEN THAT FIGHT IS OVER?

The government's focus will immediately shift to the post-conflict situation. That means containing potential hit-and-run attacks by remaining LTTE fighters hiding around the island and quelling any moves by a group that has vowed no surrender. There is also the enormous task of clearing northern Sri Lanka of thousands of landmines and hidden weapons caches. The government will also be under pressure to rapidly resettle the roughly 100,000 civilians who have escaped Tiger areas this year, getting them out of refugee camps that have been criticized by the United Nations. President Mahinda Rajapaksa is counting on at least $1 billion in development aid to help restart the economy in northern Sri Lanka.

WHAT WILL THE END OF THE WAR MEAN FOR THE ECONOMY?

It will no doubt be a boost, but Sri Lanka's $40 billion economy -- long one of the strongest in South Asia -- is reeling. That's due to the global economic crisis, low foreign exchange reserves and falling prices for its main exports of garments and tea. Tourism, which has managed well enough since the war started in 1983, is also taking a beating this year. Economic growth is expected to hit an eight-year low of around 2.5 percent after 6.0 percent in 2008. The government is negotiating a $1.9 billion International Monetary Fund loan to help boost reserves hovering at less than six weeks of import cover and cover a balance of payments shortfall. Add to that the rupee's progressive fall to new lows -- it hit a record low of 120.00/30 on Tuesday -- and months-long doldrums on the Colombo Stock Exchange and there are plenty of challenges ahead.