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Post-disaster economic recovery in the balance

Post-disaster economic recovery in the balance

14 Dec 2025


Cyclone Ditwah effectively tested Sri Lanka’s governing capacity in an age of climate risk – a test the State appears to have miserably failed. What unfolded in late November was not simply the fury of nature overwhelming human systems, but also the exposure of institutional paralysis, delayed decision-making, and a troubling attempt to displace responsibility after the fact.

In the days following the disaster, the Government found itself facing mounting criticism. The initial reflex was predictable: deflect blame. Attention was directed at the Department of Meteorology, which was accused of failing to issue timely warnings. Yet this narrative has now been decisively undermined.

The Sri Lanka Association of Meteorologists went on record last week stating that from 23 November onwards, warnings relating to Cyclone Ditwah had been issued no fewer than 25 times to ‘authorised institutions.’ These warnings were not vague advisories; they were structured alerts based on evolving data. The problem, as the association made clear, was not the absence of information but the absence of action. That distinction matters, because when warnings exist and remain unheeded, what follows is no longer an ‘act of God’ but a failure of governance.

Nowhere was this failure more evident than in the functioning  – or dysfunction – of the Disaster Management Centre (DMC). At the time the cyclone reached its most destructive intensity on 27 and 28 November, the institution tasked with coordinating national disaster response was effectively dormant and leaderless. A director general was appointed only on 29 November, after the damage had largely been done.

The DMC operates directly under the Executive authority of the President. In that context, attempts to shift culpability onto technical agencies such as the Meteorology Department appear less like genuine accountability and more like political damage control. When early warnings are issued, the chain of responsibility does not end at forecasting; it begins there.

Disaster management is not about predicting rain, it is about translating information into evacuations, reservoir management, land-use restrictions, emergency mobilisations, and timely communication with local authorities. On each of these counts, the State faltered. It is becoming clear that the consequences of this failure extend far beyond the immediate human suffering and strike at the heart of Sri Lanka’s fragile economic recovery.

Just last week, Moody’s issued a stark warning that Cyclone Ditwah could stall Sri Lanka’s post-default fiscal recovery. The rating agency cited extensive infrastructure damage and, crucially, the country’s weak capacity to manage climate-related risks. For a country still navigating the long shadow of sovereign default, perceptions of institutional resilience matter almost as much as macroeconomic numbers. 

Sri Lanka entered the final quarter of this year with ambitious but necessary targets. Foreign reserves were expected to reach $ 7.2 billion by year-end and economic growth needed to approach 6% to maintain momentum under the IMF-supported stabilisation programme. Even before the disaster, these targets were proving difficult. After Ditwah, they appear increasingly unrealistic.

By the end of November, gross official foreign reserves had fallen to $ 6.03 billion, declining by $ 183 million in a single month. The current account, which had remained in surplus for much of the year, has now slipped into deficit territory. Tourist arrivals continued to grow in November, suggesting that the reserve decline cannot be explained away by the cyclone alone. The deeper issue is structural fragility.

Yet, beyond balance sheets and credit assessments lies the human reality of Ditwah – one that resists abstraction. “The plantations are unsafe. There will not be any work for several months. We will have to snap out of plantation lives and work somewhere else,” a tea plucker told a reporter of a foreign news agency, from a Government shelter. He had fled with his wife, also a tea plucker, and their two children after landslides made their estate uninhabitable. The fate of this family can no longer be considered an isolated story; it is a window into a broader economic shock that official statements have yet to fully acknowledge.

Tea is not merely a symbol of Sri Lanka’s colonial past or a feature of its brand identity, it is one of the country’s biggest sources of export revenue. When plantations are rendered unsafe and labour displaced for months, the impact is not confined to estate communities. It ripples through export earnings, rural consumption, employment, and foreign exchange inflows. Recovery in this sector cannot be improvised for it requires coordinated rehabilitation, slope stabilisation, infrastructure repair, and social protection for displaced workers.

The same applies to another quietly critical sector now reeling from the floods: export-oriented shrimp and prawn farming. Almost all such farms have reportedly been severely affected, raising further concerns about export revenue losses. In an economy where every dollar matters, these shocks accumulate dangerously fast.

Faced with devastation, the Government has announced relief packages and compensation promises running into billions of rupees. Compassion is necessary, but compassion without method can be fiscally reckless. Disturbingly, many of these commitments have been made in the absence of verified damage assessments. The responsible approach would have been to provide immediate emergency assistance, conduct systematic data collection, calculate costs transparently, and seek parliamentary approval based on clearly articulated criteria. Instead, the country risks substituting urgency with improvisation.

This matters because relief spending does not occur in a vacuum. Increased transfers raise demand without increasing supply, fuelling inflation or import growth or both. In Sri Lanka’s case, where reconstruction materials have few domestic substitutes, the pressure will fall disproportionately on the external sector, further straining foreign reserves.

The Government has already introduced two supplementary budgets, significantly increasing expenditure this year and next. While politically understandable, these decisions will complicate relations with the IMF, potentially forcing a reopening of completed reviews and delaying the next tranche. The Central Bank Governor’s earlier confidence that Sri Lanka would end the year with record post-crisis reserves now looks misplaced.

The governance failures surrounding Ditwah are also moving towards a legal reckoning. Several Opposition parties are reportedly preparing to file Fundamental Rights petitions in the Supreme Court, alleging criminal negligence in the failure to mitigate disaster impacts that claimed hundreds of lives. What is notable is not only the scale of the legal mobilisation, with around 1,500 lawyers across the nine provinces reportedly having volunteered, but the framing of the case: whether the State violated its duty of care to citizens in the face of known risks.

To its credit, the Opposition has, so far, chosen restraint over opportunism, calling for unity and relief rather than immediate political attack. But unity in crisis must not mutate into immunity from accountability. A democracy that cannot ask hard questions after tragedy will repeat its mistakes.

Even so, Cyclone Ditwah confronts Sri Lanka with the uncomfortable truth that climate disasters will not be episodic anomalies. They will be recurring stress tests. Each one will interrogate the same questions: early warning systems, institutional readiness, land-use planning, reservoir management, fiscal buffers, and social protection.

What failed in November was not technology but governance. Warnings existed. Risks were known. Institutions were in place – on paper. What was missing was timely leadership, coordinated action, and the humility to accept responsibility rather than redirect blame. As Moody’s warning underscores, international markets are watching. But more importantly, so are citizens whose lives, livelihoods, and futures depend on whether lessons have been learnt.

Cyclone Ditwah should mark a turning point – not in speeches, but in systems. Not in slogans, but in structures. Early warnings must trigger automatic, empowered responses. Disaster management must be professionalised, insulated from politics, and led by those with authority and expertise. Climate risk cannot be treated as an occasional emergency; it is now a permanent condition of governance.

Sri Lanka stands at a dangerous crossroads. It is trying to rebuild an economy shattered by default while facing a future of more frequent and intense climate shocks. The kicker: the margin for error has vanished.


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