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By Juliana Liu , COLOMBO, Thursday (Reuters) - While government officials and the LTTE engage in high stakes politics for Sri Lanka's future, victims of the violence that has shattered the island for nearly 20 years are urging both sides to forgive and forget.

"Revenge is kind of a cancer. It's endless. If you want that, you won't have peace," Z.M. Rafeek told Reuters on Thursday, dark glasses covering eyes blinded in a bomb blast in the capital six years ago. Rafeek said he hoped peace talks between the government and the government starting on Monday at a naval base in Thailand would end one of Asia's longest-running wars.

The 42-year-old financial manager, an ethnic minority Muslim, was one of about 1,400 people wounded when a truck filled with 250 kg of explosives rammed into Sri Lanka's Central Bank in the capital Colombo. "It was about 10:45 in the morning when we heard a big noise, but we took no notice of it," he said, recalling the day in January 1996.

"When I was about to turn, the bomb went off," he said. "I was thrown about three to four yards. I was flying."

Colleagues rushed him to a hospital, where doctors burdened with hundreds of bomb blast victims restarted his pulse and pried pieces of glass from his skin.

However, they were unable to remove the tiny glass fragments embedded in his eyes, which permanently damaged his retinas.

"I can still remember the forceps, trying to dig out the glass and shrapnel," Rafeek said as he pointed to white scars on his chin and hands. "I was screaming out, but I couldn't blame them. They were trying to save my life." After recuperating for three months in an Indian hospital, he returned to his managerial job and a city gutted by the blast.

Rafeek credited Islam for easing his anger and called on Sri Lankans, mostly ethnic Sinhalese Buddhists, to forget the past 19 years of war. The conflict has killed about 64,000 in all, displaced 1.3 million people and handcuffed the economy.

He said he harboured no hatred for the Liberation Tigers of Tamil Eelam (LTTE).

"Let's give them the opportunity to prove themselves. Everyone in the world has made mistakes," Rafeek said from the modest suburban house where he lives alone. "If not, you'll find more disabled people like me." Meanwhile, the Sri Lankan government is sending a 'peace for economic growth' message before it sits down to talks with the LTTE on Monday.

Officials say an end to nearly two decades of war is the only way to lift the island's stumbling economy - a potential Achilles' heel of the government's peace efforts - and ease the pain of planned economic reforms.

"The government strategy is very clearly to get the economy right," said Arjuna Mahendran, head of the state Board of Investment which promotes investment in the island.

Sri Lankan Prime Minister Ranil Wickremesinghe has told the public the economy will improve only with peace.

"We have fought a war at the cost of development," he told a pro-peace rally this week.

Along with the Norwegian-brokered peace bid, the government is gearing itself for a major programme of borrowing from the International Monetary Fund, World Bank and donor countries tied to tough economic reforms.

Sri Lanka's economy saw its worst-ever contraction of 1.4 percent last year under the war cloud and a drought.

To push his economic agenda, he will fly to New York to open an investor forum on the same day government negotiators sit down with officials from the LTTE.

Norway, acting as a go-between to bring the two sides to the negotiating table, has urged international donors to step up their spending to give the peace process a boost.

"We believe it would underpin and strengthen the peace process if tangible benefits are brought to people both in the North and the South of Sri Lanka.

This will be an important part of the first round of talks," Norwegian Deputy Foreign Minister Vidar Helgesen said during a visit to Ottawa. Lingering uncertainty regarding the peace process - the talks could take years and all other peace talks have failed - has kept investors and donors mostly on the sidelines. But although the central bank lowered its forecast for full-year growth to three percent from 3.7 percent after first-quarter growth 0.1 percent, there are signs of improvement.

Tourist arrivals should climb in the second half of the year, and foreign investment has started to pick up.

"There are signs of a recovery. The benefits of what the government is doing now will not be seen immediately," said Chinthaka Ranasinghe, head of research at John Keells Stockbrokers. Stock investors have already backed the peace bid, pushing up Colombo's tiny market.

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