Critical need for rapid Ditwah Damage Assessment
There is an urgent and critical immediate need for a rapid assessment in the country in the aftermath of the devastating cyclone Ditwah, Gevorg Sargsyan, the World Bank (WB) Country Manager for Sri Lanka and Maldives, said at the Sri Lanka Economy Summit in Colombo this week.
“It is important to assess the damage using drones, commerce, satellite imagery etc. targeting priority areas and working closely with the Asian Development Bank and the United Nations.”
Security forces to the rescue.
The summit, originally themed “Gateway to Growth: Asia’s Emerging Opportunity,” n its 25th year, shifted its focus to national resilience and recovery following the devastation caused by Cyclone Ditwah. Ceylon Chamber of Commerce Chairman Krishan Balendra, in his keynote, highlighted the need to address the loss of life and destruction, emphasising the business community’s collaboration with government agencies for relief efforts.
Despite the immediate crisis, he said Sri Lanka remained on a credible path of economic recovery, with inflation stabilising, confidence improving, growth nearing 5 per cent, domestic debt restructuring completed and stronger inflows from exports, tourism, and remittances. International institutions, including the IMF and the World Bank, had also signalled confidence in the reform trajectory.
Need for second-generation reforms
Addressing the audience at the first panel discussion of the summit titled “Macroeconomic Dashboard: Stability Secured, Growth Unleashed?”, Treasury Secretary Dr. Harshana Suriyapperuma noted that the Treasury had engaged with the WB for assessing the disaster, and within about 14 days, the initial understanding of the impact of this cyclone will be released. A total of Rs. 7.5 billion has been allocated for the assistance programme aimed at disaster management. This funding is part of a larger budget, with Rs. 30 billion designated in the national budget specifically for disaster management initiatives. The allocation reflects a commitment to addressing the needs arising from disasters and enhancing the support available to affected communities. “We have reached out to the banking and insurance sectors to understand what the impact is on their clients and customers and how to work together as a team to take the country forward,” Dr. Suriyapperuma added, noting that the Treasury will be discussing matters with the insurance regulator and industry leaders shortly. “We want to understand their response so that we can help businesses get back on their feet very quickly and support individuals to contribute back into the economy.”
The Central Bank of Sri Lanka (CB) has established operational channels for timely relief disbursement, including state bank accounts for donations from both local and international supporters, CB Governor Dr. Nandalal Weerasinghe said, noting that the government can manage short-term fiscal relief and is in a stronger external position than before, with sufficient buffers available for support if necessary. On the monetary side, the CB is prepared to provide liquidity support to the banking system if required, although recent days have not necessitated such action.
Asian Development Bank Senior Country Economist Lilia Aleksanyan said that the donor agency will be reallocating funds from different projects, which are non-urgent, and the UN disbursed funds for the recovery efforts. She said the donor agencies are awaiting the post-disaster recovery assessment.
Ditwah Investor risk down with robust financials
Standard Chartered Bank economist Saurav Anand indicated that three types of investors are currently active in Sri Lanka: holders of dollar bonds, local-currency Government securities buyers, and corporate investors considering foreign direct investments. All groups remain optimistic, driven by Sri Lanka’s conformity to IMF benchmarks and the expectation of achieving a nominal GDP of US$100 billion during the programme period. Foreign holders are focused on policy continuity and exchange-rate stability, while corporate investors are assessing structural reforms and geopolitical factors. “Despite concerns raised by Cyclone Ditwah regarding fiscal space, overall anxiety is mitigated by robust fiscal performance, although the external account may face risks if reconstruction costs exceed inflows,” Mr. Anand said.
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