Sri Lanka’s economic recovery already strained by two years of contraction, rising living costs, and fiscal compression has been dealt a severe new blow by Cyclone Ditwah and the resulting floods.
As the Government grapples with nationwide devastation, the Finance Ministry yesterday convened a high-level donor forum bringing together bilateral partners, multilateral institutions, lending agencies, and diplomatic missions to coordinate emergency support and chart the path toward reconstruction.
Co-chaired by Central Bank Governor Dr. Nandalal Weerasinghe and Treasury Secretary Dr. Harshana Suriyapperuma, the forum revealed the scale of damage across housing, agriculture, transport, irrigation systems, and community infrastructure.
Preliminary internal assessments indicate that Sri Lanka may face losses equivalent to 1%–3% of GDP, suggesting a reconstruction requirement in the range of Rs. 350-1,050 billion a figure that could rise once comprehensive ground surveys conclude. Several districts remain inaccessible, further delaying robust verification of economic and social losses.
Given Sri Lanka’s limited fiscal space and stagnant revenue streams, external support has become indispensable. Development partners reaffirmed strong backing, with the IMF confirming that US$350 million under the Extended Fund Facility’s sixth tranche could be made available within two weeks providing crucial liquidity for imports and early-stage restoration.
Multilateral agencies and donor nations have begun dispatching relief consignments, including food, drinking water, hygiene supplies, medical kits, and emergency shelter materials. Some countries have already deployed specialist disaster-response teams.
The World Bank has initiated a rapid damage assessment, while development partners agreed to repurpose portions of existing loan portfolios toward bridge repairs, road rehabilitation, irrigation restoration, and housing reconstruction.
Discussions also focused on mobilising new concessional financing and grant support for long-term rebuilding.
The Government urged partners to promote travel to Sri Lanka to help stabilise tourism, which is likely to experience short-term disruption following widespread flooding.
Authorities emphasised the need for a blend of immediate humanitarian assistance and medium-term concessional financing to prevent a derailment of the broader economic recovery plan.
Despite the growing support, the road ahead is steep. Rebuilding thousands of homes, restoring agricultural losses, repairing national highways and rural roads, and replacing damaged public facilities will require a multi-year programme and billions of rupees in investment.
Effective coordination, transparent spending frameworks, and robust monitoring will be critical to maintaining donor confidence.
As Sri Lanka navigates yet another crisis layered upon economic fragility, international partners have signalled solidarity. The challenge now lies in converting this support into a coherent, well-governed reconstruction programme capable of restoring livelihoods and preventing deeper economic scarring.
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