Living costs have emerged as the top election issue in this tropical island enjoying a shaky peace with Tamil Tigers after three decades of bloodshed.

Although a daily death toll is reported from the embattled northeast despite the ceasefire, voters are more concerned with bread and butter issues.

"The cost of living should be affordable if we are to enjoy the ceasefire," says 48-year-old security guard G. H. Gunapala, underscoring how this nation of 19.5 million people has taken the truce for granted.

A ceasefire agreement between the government and Tamils seeking a separate homeland was signed in February 2002.

Gunapala earns around 50 dollars a month -- about half the average per capita income on the island.

A private thinktank found in a survey that the electorate believed the cost of living was the most important campaign issue, pushing the peace process to second.

The message has been heard loud and clear by the main contenders, Prime Minister Mahinda Rajapakse and Opposition Leader Ranil Wickremesinghe, who are offering a string of social welfare policies.

Both candidates have promised free food for school children and subsidies on housing, transport and fertilizer.

Neither has specified how they plan to fund the give-aways, especially since skyrocketing international oil prices have already blown a hole in the nation's budget.

Economists say a huge social welfare bill will be at the cost of economic growth. However, both candidates have also promised a GDP growth rate of over eight percent.

The survey by the Centre for Policy Alternatives showed that 37 percent of those polled did not believe either candidate will make good on their promises.

They could instead choose rank outsider, Victor Hettigoda -- a businessman who made a small fortune peddling a pain killer balm. He offers a free cow for every home to boost individual incomes.

Wickremesinghe's pro-capitalist United National Party is offering 50 million dollars in farm subsidies if he is elected, while Rajapakse has vowed to top that.

"I don't believe in the election handouts, no one honours them... But even if they take foreign loans to give us cheap food, we have to pay by way of taxes," said R. Yogaletchami, a 24-year-old shop assistant.

Rajapakse's promises were unexpectedly undermined when the national budget, presented by his own ruling coalition last week, failed to make provisions for his promised welfare measures.

"Both candidates are very promising, but the election manifestos are mere ceremonial statements," said Channa Amaratunga, economist and chief investment officer at Boston Asset Management.

"In reality they are not coming out with hard numbers, (on) how they plan to fund a welfare state, tackle deficits, inflation or even pay for next year's oil bill."

Among the immediate priorities for the next president is the challenge of tackling politically-unpopular reforms in the loss-making energy sector, privatisation and infrastructure.

"That should unleash a new source of growth," said Alastair Corera, country head of Fitch Ratings Lanka.

Wickremesinghe is non-committal on structural changes whereas Rajapakse rejects privatisation of state assets outright.

Whoever wins will have to deal with reconstructing coastlines battered by the December 26 tsunami, estimated to cost between 1.5 to 1.6 billion dollars.

Foreign aid pledged is more than enough to cover reconstruction, but the state has been able to spend only 13 percent of the money because of inefficiencies, according to an official audit report.

Candidate Hettigoda says the two main candidates will not be able to deliver even half the promises they have made. If they do, he said: "Even the gods will come down from the heavens and decide to live in Sri Lanka."

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