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Sri Lanka’s Ambassador to France and Permanent Delegate to UNESCO, Manisha Gunasekera, held a high-level meeting with UNESCO Director-General Khaled El-Enany at the organization’s headquarters in Paris on December 19 to discuss assistance for Sri Lanka in the aftermath of Cyclone Ditwah.

During the discussion, Ambassador Gunasekera briefed the Director-General on the extensive impact of the cyclone and outlined the government’s rebuilding and recovery plans. She also expressed appreciation for UNESCO’s rapid deployment of emergency aid under the Heritage Emergency Fund, which helped stabilize and conserve archival records damaged by flooding.

In response, Director-General El-Enany conveyed his condolences to Sri Lanka and reaffirmed UNESCO’s commitment to providing both immediate and long-term support. He highlighted plans for an integrated intersectoral response tailored to Sri Lanka’s priorities, including the recovery of cultural heritage, educational support for schools, psychosocial assistance, and technical cooperation to enhance hydrological risk assessment and early warning systems. Assistance will be coordinated through UNESCO’s Regional Office in New Delhi.

The meeting also included a ceremonial element, with Ambassador Gunasekera delivering a congratulatory message from Foreign Minister Vijitha Herath on the Director-General’s election, emphasizing Sri Lanka’s commitment to supporting UNESCO’s mandate.

Director-General El-Enany acknowledged the efforts of Prime Minister and UNESCO National Commission Chairperson Harini Amarasuriya and Minister Herath for Sri Lanka’s continued engagement with UNESCO.

Senior UNESCO officials attending the meeting included Ahmed Zaouche (Chief, Crisis Preparedness and Response), Omar Monieb (Chief, Relations with Member States), and Manh Ha Tran (Chief, Asia and the Pacific, Priority Africa and External Relations Sector). Ambassador Gunasekera was accompanied by Rifa Wadood, Minister/UNESCO at the Sri Lankan Permanent Delegation.

Sri Lanka’s Micro, Small and Medium-sized Enterprise (MSME) sector contributing over 52 percent of GDP and accounting for nearly three-quarters of the country’s entrepreneurial base has once again emerged as both the backbone and the most fragile pillar of the national economy.

Already weakened by years of macroeconomic instability, punitive interest rates, and shrinking credit access, the sector is now grappling with the devastating fallout from Cyclone Ditwah and the subsequent floods, which industry leaders say have inflicted damage exceeding even the 2004 tsunami in certain regions.

 

According to Ceylon Federation of MSMEs (CFMSME) President Mahendra Perera, the impact on businesses located in low-lying flood-prone areas has been severe and widespread. Initial assessments conducted by a special support centre under the Ministry of Industries reveal that 13,698 enterprises have been directly affected. This includes 5,639 micro enterprises, 4,636 small businesses, 2,986 medium-scale firms, and 437 large-scale enterprises, highlighting the depth and breadth of the disruption across the production and services economy.

The cyclone struck at a time when the MSME sector was already on the brink. Recent data shows that more than 60 percent of MSMEs are now classified as Non-Performing Loan (NPL) holders, largely due to prolonged exposure to double-digit borrowing costs during the economic crisis. Forced shutdowns lasting days and, in some cases, weeks have further crippled cash flows, pushing many enterprises from financial distress into outright default.

Compounding the crisis is the fact that a large proportion of MSMEs operate without adequate insurance coverage, while many lack digital backups of financial and operational records, intensifying post-disaster losses and delaying recovery. CFMSME estimates place direct economic losses to MSMEs between Rs. 50 billion and Rs. 85 billion, while the overall economic damage could extend to nearly Rs. 200 billion, when supply-chain disruptions and secondary impacts are included.

A comprehensive impact report prepared by CFMSME has already been submitted to the relevant authorities, calling for urgent, targeted intervention. The Government has responded by announcing immediate relief measures, including Rs. 200,000 in financial assistance for all disaster-affected industries and compensation of up to Rs. 5 million for physical and building damage.

However, industry leaders caution that speed, transparency, and accessibility will ultimately determine whether these measures translate into real recovery. Past experience suggests that delays in fund disbursement and procedural bottlenecks often blunt the effectiveness of well-intentioned relief packages.

Beyond immediate relief, Mahendra Perera outlined a series of policy interventions aimed at stabilising and rebuilding the MSME sector. These include rapid grant disbursement, concessional low-interest recovery loans, extended loan moratoriums of up to 12 months, suspension of parate execution, and flexible debt restructuring frameworks. Crucially, CFMSME has also called for access to fresh credit regardless of temporary adverse CRIB records, recognising that many defaults stemmed from systemic shocks rather than business mismanagement.

Additional proposals focus on asset replacement, disaster-resilient rebuilding, subsidised insurance schemes, wage support for affected workers, and restoration of disrupted supply chains, with tailored assistance for manufacturing, agriculture, tourism, and export-oriented MSMEs.

At a structural level, business leaders are advocating the establishment of a dedicated MSME Disaster Recovery Task Force and the integration of climate resilience into national MSME policy, aligned with the Climate Finance Strategy 2025–2030. Without such reforms, Cyclone Ditvah may be remembered not merely as a natural disaster, but as a stark warning of unresolved systemic fragility within Sri Lanka’s economic architecture.

Member of Parliament Ramanadan Archchuna was arrested after surrendering to the Fort Police, authorities confirmed.

The arrest followed Archchuna’s voluntary appearance at the Fort Police station, after the Fort Magistrate’s Court issued a warrant for his arrest yesterday (23).

The warrant was issued due to his failure to appear in court in connection with an ongoing case.

M.G. Hemachandra’s elevation to Chairman of the Urban Development Authority (UDA) has reignited debate over whether institutional reform is finally possible at one of Sri Lanka’s most controversial state agencies. For decades, the UDA has been dogged by accusations of tender irregularities, stalled projects and urban plans detached from ground realities ,failures now laid bare by catastrophic cyclone- and flood-related damage across the country.

Unlike many past appointments, Hemachandra enters the role with deep exposure to international governance frameworks. His tenure at JICA involved overseeing loan-funded infrastructure projects under strict compliance regimes, where transparency, post-evaluation and risk management were non-negotiable. Governance specialists argue that such experience could help dismantle entrenched practices that have weakened public trust in the UDA.

The timing of the appointment is critical. Climate-driven disasters have underscored how unplanned urban expansion, blocked waterways and poorly regulated construction have amplified human and economic losses. Urban planners insist that the UDA must now pivot from prestige projects to resilience-focused development an approach aligned with Hemachandra’s academic training in infrastructure management and his professional work in policy design.

His credentials extend beyond technical competence. As a Fellow of the Institution of Engineers Sri Lanka and a former Vice President of the Association of Consulting Engineers Sri Lanka, Hemachandra has consistently advocated for professional accountability in public projects. His experience as an adjudicator and mediator in construction disputes also equips him to address contractor-related inefficiencies that have historically plagued UDA ventures.

However, reforming the Authority will require more than personal integrity. Analysts caution that systemic issues political pressure, fragmented mandates and weak enforcement cannot be resolved by leadership alone. Hemachandra’s challenge will be to institutionalise transparent procurement, introduce independent project audits and rebuild technical capacity within the organisation.

The post-disaster context may offer an opening. With public scrutiny intensified and reconstruction funds at stake, the political cost of business-as-usual has increased. If leveraged correctly, this moment could enable long-delayed reforms in zoning, drainage planning, urban housing and land-use regulation.

Whether Hemachandra can translate his international experience into domestic institutional change remains uncertain. What is clear, however, is that the UDA’s future relevance and Sri Lanka’s urban resilience now hinges on whether this appointment marks a genuine break from the past.

Sampath Manamperi, currently under the custody of the Police Western Province North Crimes Division in connection with accusations of concealing two containers of raw materials allegedly used to manufacture crystal methamphetamine (‘Ice’) and possession of weapons, appeared before the Walasmulla Magistrate’s Court today .

During the hearing, police requested a 90-day extension to continue questioning Manamperi as part of the ongoing investigation.The court subsequently approved the request, ordering that Manamperi remain in detention until March 20, 2026.

Beyond the immediate economic damage, Cyclone Ditwah has exposed the growing difficulty Sri Lanka faces in meeting IMF benchmarks and reform conditions while responding to an escalating climate crisis.

The IMF’s latest assessment acknowledges that Sri Lanka entered the disaster with stronger macroeconomic fundamentals than in previous years. Inflation was subdued, reserves had stabilised, and growth momentum had returned. However, the cyclone has fundamentally altered the policy landscape, forcing the Government to juggle fiscal discipline with urgent humanitarian and reconstruction needs.

One of the most immediate challenges lies in public finance management. Emergency relief, housing reconstruction, and infrastructure repair will inevitably increase spending pressures at a time when the IMF programme demands strict expenditure control, revenue mobilisation, and primary surplus targets. While the Fund supports temporary disaster-related spending, it has made clear that transparency, procurement discipline, and adherence to fiscal rules are non-negotiable  a tall order given Sri Lanka’s past record of weak oversight during emergencies.

Capacity constraints represent another binding limitation. Administrative resources are now being diverted toward disaster response, potentially delaying structural reforms, tax administration upgrades, and state-owned enterprise restructuring all key IMF benchmarks. The Fund itself flagged this risk, warning that reform momentum could slow just when consistency is most needed to anchor investor confidence.

Externally, the cyclone compounds existing vulnerabilities. Higher import demand for food, fuel, and construction materials threatens to widen the current account deficit, while tourism disruptions and export losses weaken inflows. At the same time, global risks — including potential renewed US trade tariffs, geopolitical tensions, and volatile energy prices — could further undermine projections underpinning the IMF programme.

Inflation management also becomes more complex. Food shortages and supply-chain disruptions are already feeding into prices, increasing the likelihood of inflation overshooting targets. Tightening monetary policy to contain inflation risks slowing growth further, while loosening it could undermine programme credibility a delicate balancing act for policymakers.

Yet the IMF assessment is not without constructive signals. The Fund projects that growth could recover to around 3.1% by 2027, with inflation easing and external balances improving as agriculture and tourism rebound. Reconstruction, if well-managed, could even strengthen climate resilience and productivity.

The central challenge, therefore, is execution. Meeting IMF conditions amid a climate shock requires not just compliance, but institutional strength, political discipline, and policy coherence. Failure to manage this balance risks turning a temporary natural disaster into a prolonged economic setback.

Sri Lanka’s tea industry demonstrated resilience in 2025, with higher export volumes cushioning the impact of fluctuating global prices and exchange rate movements. Data compiled by Forbes & Walker Research, based on Sri Lanka Customs statistics, show that tea export earnings reached an estimated $1.4 billion in the first 11 months to November, marking a solid year-on-year improvement.

While international tea prices remained under pressure in several key markets, Sri Lanka managed to expand its shipment volumes significantly. Total exports rose to 239.57 million kilograms, compared to 223.22 million kilograms during the same period in 2024. With the exception of Bulk Tea, all major product categories recorded positive volume growth, highlighting a gradual shift towards higher-value and specialty segments.

Monthly performance in November reflected some short-term softness, with exports declining by 0.71 million kilograms year-on-year. The contraction was mainly driven by lower shipments of bulk and packeted tea, even as Instant Tea and Green Tea continued to gain traction among buyers seeking convenience and health-oriented products.

Price movements were mixed across currencies. The average FOB value in rupees strengthened during November, supported partly by domestic cost adjustments and currency factors. In contrast, dollar-denominated prices edged lower, underscoring the challenges faced by exporters competing in price-sensitive global markets.

Despite these pressures, the cumulative dollar FOB average for the January–November period remained broadly stable at $5.85 per kilogram, allowing earnings to grow in line with higher volumes. Analysts note that this performance reflects strong demand from traditional Middle Eastern and Eurasian markets, alongside renewed buying from North Africa.

Iraq continued to dominate as the largest destination, accounting for more than 36 million kilograms of imports. Türkiye and Libya emerged as key growth markets, while shipments to Russia softened amid economic and logistical constraints.

However, industry stakeholders caution that reliance on volume-led growth alone may not be sustainable. Rising production costs, labour constraints, and climate-related disruptions pose ongoing risks to margins. They argue that increasing value addition, strengthening branding, and expanding premium offerings will be essential to protect earnings in the medium term.

As global competition intensifies, Sri Lanka’s tea sector faces a strategic choice: continue defending market share through volume, or pivot more decisively toward differentiated, higher-margin products that can withstand pricing volatility.

Cyclone Ditwah’s immediate physical destruction estimated at $4.1 billion or roughly Rs. 1.3 trillion by the World Bank may represent only the first layer of a far larger economic shock, with indirect losses and delayed recovery costs likely to push total damage beyond Rs. 2.5 trillion, analysts warn.

The Global Rapid Post-Disaster Damage Estimation (GRADE) report captures direct damage to infrastructure, housing, agriculture, and public facilities, amounting to nearly 4% of national GDP. However, it excludes lost income, business disruption, productivity decline, and the full fiscal cost of recovery factors that often exceed the initial damage bill.

“Direct damage is only the visible tip of the economic iceberg,” said a Colombo-based macroeconomist involved in disaster-impact modelling. “International experience shows that indirect losses typically match or exceed physical damage when recovery is slow.”

Applying a conservative 1:1 loss multiplier, commonly used by multilateral lenders in post-disaster assessments, Sri Lanka’s total economic exposure could reach Rs. 2.6 trillion, once stalled output, agricultural income losses, emergency spending, and reconstruction delays are incorporated.

Infrastructure damage alone estimated at Rs. 550 billion has disrupted transport corridors, irrigation networks, and water systems. Each month of delayed repairs compounds losses across agriculture, trade, and logistics. Agriculture, already weakened by climate stress, has sustained Rs. 260 billion in direct damage, threatening planting cycles and food supply stability.

Housing damage of Rs. 315 billion has created a parallel fiscal burden. If even 200,000 severely affected households receive compensation averaging Rs. 1 million, the state faces an immediate Rs. 200 billion liability, excluding reconstruction of schools, hospitals, and public assets.

Disaster-risk analysts argue that governance gaps are magnifying the economic impact. “Recovery speed depends less on money than on decision quality,” noted a regional disaster-risk specialist. “Fragmented policy coordination and weak high-level communication with development partners slow financing and inflate costs.”

While the World Bank has mobilised $120 million from existing projects, this represents a fraction of needs. Analyst’s stress that effective recovery will require clear fiscal signalling, credible economic data, and skilled engagement with international financiers capacities that must be strengthened urgently.

Cyclone Ditwah has underscored a hard lesson: climate disasters are now macroeconomic events, demanding institutional readiness equal to their scale.

Dr. S. Jaishankar, India’s foreign minister visited Sri Lanka today. Arriving on the island in Ditwah’s wake and as the personal envoy of Prime Minister Modi, his visit is more than a diplomatic formality. It is a substantive reaffirmation of a Sri Lanka-India partnership built on the bedrock of strategic reliability.

As Sri Lankans, we must all extend our sincere appreciation for the speed and scale of India’s response to the devastation of Cyclone Ditwah.

We often discuss the "First Responder" concept in abstract terms. However, over the past few weeks, India showed what the words really meant. The deployment of men and helicopters from the INS Vikrant in Colombo harbor on the very day of the cyclone’s landfall, the sustained presence of search and rescue teams, the operation of a field hospital and Bailey Bridges have given that concept a very tangible and human meaning. We will not forget this immediate and most human kindness from the people of India.

Reliability is defined by presence when it matters most. As we move onto the recovery and reconstruction phase - which follows the crises of the Easter Bombings, COVID and economic collapse - assistance for reconstruction is the need of the hour. India has proved its reliability. We must thank the people of India and the people of all other countries who have stood by us at this hour of peril and need.

The Indian assistance package of $450 million is generous - including $100 million as an outright grant. It fits well with our needs: focusing on reconstruction of roads and rail, housing, health and education, and agriculture. We must also commend the Indian government for its efforts to promote tourism and FDI into Sri Lanka.

For Sri Lanka, the aftermath of Cyclone Ditwah has been a sobering reminder of our vulnerability. India’s generosity - and the generosity of the many other countries that have come to our aid - is a reminder that in an increasingly precarious, uncertain and transactional world; universal, civilizational values and fundamental empathy between peoples not only remains but flourishes.

Through this crisis, us islanders are reminded that we have friends and family among the community of nations. And while friends and family may have their quarrels and differences - in times of crisis like this their true character reveals itself. Through this crisis, we can draw comfort that not only do we have friends, we have reliable friends.

 By Krishantha Prasad Cooray

Sri Lanka’s decision to tap the International Monetary Fund’s Rapid Financing Instrument (RFI) following the devastation caused by Cyclone Ditwah has been presented by the Government as a timely and low-cost lifeline. Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando has argued that the IMF’s approval of approximately US$206 million offers emergency balance-of-payments relief at an exceptionally low and transparent interest rate. However, a closer examination of the facility raises important questions about cost, sustainability, and longer-term fiscal implications.

Cyclone Ditwah struck the island on November 28, inflicting widespread human and economic damage. With over 600 lives lost, tens of thousands displaced, and critical infrastructure destroyed, the immediate humanitarian and reconstruction needs are undeniable. In this context, the IMF’s rapid financing appears to provide short-term breathing space for an economy still emerging from its worst crisis in decades.

Yet, while Dr. Fernando has emphasised the RFI’s headline interest rate of around 3.27%, linked to the IMF’s Special Drawing Rights (SDR) framework, this figure does not fully capture the effective cost over time. IMF lending terms are not static. Interest rates fluctuate weekly, and additional surcharges can apply depending on the size and duration of borrowing relative to Sri Lanka’s IMF quota. These surcharges potentially rising by up to 200 basis points may not be immediate, but they are neither hypothetical nor rare.

Moreover, the RFI is designed as a short-term emergency instrument with a repayment window of three to five years. While suitable for shock absorption, it also adds to Sri Lanka’s already strained external debt obligations at a time when fiscal buffers remain thin. Emergency funding may ease immediate balance-of-payments stress, but it does not generate foreign exchange earnings or address structural weaknesses in revenue, productivity, or disaster resilience.

Dr. Fernando has also framed the RFI as a confidence-building tool, warning against “misinformation” undermining recovery momentum. However, transparency requires acknowledging both benefits and risks. IMF emergency financing, even when fast-disbursing and lightly conditioned, still reinforces reliance on external borrowing rather than domestic resource mobilisation or risk-pooling mechanisms such as disaster insurance.

Alongside IMF support, the Government has announced temporary domestic relief measures, including three- to six-month loan repayment extensions for affected businesses and the introduction of concessional credit facilities through licensed banks. While these measures may ease short-term cash flow constraints, their effectiveness will depend on consistent implementation and the banking sector’s willingness to absorb risk without transferring costs back to borrowers later.

In sum, while the IMF’s RFI provides urgently needed liquidity after Cyclone Ditwah, portraying it as unequivocally “low-cost” risks oversimplifying a complex financial reality. Emergency relief is necessaryand it is not free, and it is not a substitute for long-term economic resilience.

Sri Lanka’s plantation sector is once again confronting the difficult task of balancing humanitarian response with economic recovery, following the widespread disruption caused by Cyclone Ditwah. According to the Planters’ Association of Ceylon (PA), Regional Plantation Companies (RPCs) moved quickly to protect estate workers and surrounding communities, activating emergency protocols and coordinating closely with State authorities to manage immediate risks.

Plantation estates, often located in environmentally sensitive and disaster-prone regions, were among the areas most exposed to flooding and landslides. In the cyclone’s immediate aftermath, estate management teams identified high-risk zones and relocated families from vulnerable locations to safer shelters, including schools and places of worship. These actions, the PA says, were aimed at minimising loss of life and ensuring basic safety during extreme weather conditions.

While access routes and essential services are gradually being restored, the PA acknowledges that a full assessment of damage to estate housing, infrastructure, and cultivations is still ongoing. Preliminary evaluations, supported by the Plantation Human Development Trust (PHDT) and relevant Government agencies, point to localized damage across multiple estates, particularly in hill-country regions already weakened by persistent rainfall.

Beyond emergency relief, RPCs have focused on restoring a degree of normalcy to estate life. Debris clearance, temporary repairs to housing, and the reopening of access roads have allowed most estates to resume limited operations. Estate medical teams and welfare officers remain active, monitoring health conditions and working alongside public health authorities to prevent post-disaster risks such as waterborne diseases.

However, the cyclone has struck at a time when the plantation sector is already under severe economic strain. Rising production costs, labour shortages, volatile global tea and rubber prices, and declining productivity have left little fiscal space for unplanned shocks. Industry analysts note that climate-related disruptions are becoming more frequent, intensifying the urgency for resilience-building rather than short-term recovery alone.

The PA has stressed that while humanitarian priorities remain paramount, the sector’s revival cannot be delayed indefinitely. Damage to cultivations—particularly tea bushes vulnerable to waterlogging and soil erosion—could have medium-term impacts on output and export earnings if rehabilitation is slow. Tea exports, which earned over $1.4 billion in recent years, remain a key source of foreign exchange.

As Sri Lanka enters another rainy season, RPCs are reviewing disaster preparedness frameworks, reinforcing early warning systems, and reassessing settlements in high-risk areas. Temporary closures and precautionary evacuations are being implemented where necessary.

The PA argues that Cyclone Ditwah should be viewed as both a crisis and a warning—underscoring the need for coordinated policy support, climate adaptation investment, and sustainable reform if the plantation sector is to recover and remain viable in an increasingly unpredictable environment.

Chairman of the Committee on Public Finance (COPF), MP Harsha de Silva, has formally raised concerns with President Anura Kumara Dissanayake over the lack of an Auditor General at a critical post-disaster juncture, describing the situation as deeply troubling.

In a letter addressed to the President, MP de Silva pointed out that the government has already established the ‘Rebuilding Sri Lanka Fund’, but questioned how financial accountability can be ensured in the absence of an Auditor General. He stressed that effective auditing would only be possible if the fund is formally brought under parliamentary oversight and monitored by a duly appointed Auditor General.

Highlighting constitutional provisions, de Silva reminded the President that authority over public finances rests with Parliament under Article 148 of the Constitution. He therefore urged the immediate appointment of an Auditor General to safeguard transparency and fiscal discipline, particularly in relation to disaster recovery funds.

Speaking to the media, de Silva said he had been informed by the President’s Secretary that the letter had been received, but noted that no action has been taken so far. He added that the concerns were conveyed following consultations with other members of the COPF.

The issue has gained urgency following the expiration of the acting Auditor General’s term on December 6. Efforts to appoint a permanent Auditor General have stalled after several nominees proposed by the President were rejected by the Constitutional Council, leaving the key oversight position vacant.