A turning point for a more resilient economy

By Dhananath Fernando

What Sri Lanka faced with Cyclone Ditwah is unprecedented. The loss of human lives and the damage to homes, roads, and livelihoods cannot be captured in a single-rupee figure.

There is very little value in the blame game now. The only useful response is to ask how we can build better, not simply build back. Our strategy has to be better than before.

This is not easy. We are coming out of a painful debt restructuring and a severe economic crisis.

The first step is a decision. If we aim only to put things back to where they were, we will almost certainly fail. If we decide to build better, we must accept that the main bottleneck will not be money alone. It will be the way the State works.

Governments can find money. Multilateral agencies and friendly countries can support us. But delays come from bureaucracy and procedures.

After the tsunami, Sri Lanka had more than enough funds on paper. The real problem was spending it on time. Files moved slowly, approvals were stuck, and people waited.

Transparency and good governance are essential. Yet too many layers, too many signatures, and too much fear of taking a decision can cause more harm than good.

Four pillars

To avoid repeating the same mistake, we need four pillars to work together.

The first is the strategic layer, led by the President and the Cabinet. They must set clear priorities and identify the main areas for rebuilding. Roads, bridges, schools, hospitals, tanks, and other public infrastructure that are critical for mobility, education, health, and agriculture need immediate attention. This is a macro-level decision. The Government must say clearly which districts, which sectors, and which projects are first in line and publish that list.

The second is the Treasury and finance layer. This is where funds must be released quickly and predictably. The good news is that in the first 11 months of 2025, revenue performance has been better than expected. That gives some room. But the key is not only how much money we allocate. It is how fast we transfer it to the agencies that can actually spend it. Districts that are hardest hit must get advance allocations linked to the priorities decided at the top, with simple formulas and simple reporting.

The third is the operational layer. Here the district and divisional secretariats, provincial authorities, and local councils are in the front line. Their spending limits need to be raised for emergency work. Their procedures to call bids for urgent repairs must be simplified. If we wait for a central mechanism in Colombo to clear every road, tank, dam, culvert, and minor bridge, recovery will drag on for years. Many of these tasks can and should be done at the local level, with standard price schedules, simple contracts, and strict but reasonable timelines.

The fourth is the governance and transparency layer. Faster spending does not mean a free-for-all. The Auditor General’s Department should be involved from the start, not at the very end only to write a critical report. Clear guidelines on emergency procurement and reconstruction can be issued for all district and divisional secretariats so they act as one team. Major bridges and A-class roads can remain under central ministries. But cleaning debris, repairing rural roads, restoring minor irrigation, and helping affected households should be decentralised.

The work of rebuilding

To make this work we have to trust our officials, empower them, and hold them accountable. If the State worries about capacity, we can invite professional bodies such as the Institute of Chartered Accountants of Sri Lanka and engineers’ associations to support audit, monitoring, and technical approval. This will improve both speed and credibility.

Support to affected households should also be as close to the ground as possible. Cash transfers, vouchers, or material assistance should be handled at local level using existing social protection lists, with space to update them after proper verification. People who have lost everything should not have to travel from office to office, or from district to Colombo, to prove that they are victims.

If any regulatory changes are needed to relax procedures in the short term, the Government has the numbers in Parliament to act. Emergency regulations and amendments with sunset clauses can be used for a limited period, with clear publication of all contracts and major payments.

At the same time, the Government must revisit the 2026 Budget. Some spending planned for less urgent areas will need to be repurposed towards rebuilding and repair. This will also mean a conversation with the International Monetary Fund (IMF). Some targets and benchmarks may have to be adjusted so that the revised budget remains consistent with the programme while giving space for essential recovery spending.

In the medium and long term, ‘building better’ must be tied to structural reforms. Ditwah has shown again how vulnerable our people are. Food tariffs that keep prices high hurt poor households during and after a disaster. Construction sector tariffs on cement, steel, tiles, and fittings raise the cost of rebuilding houses, bridges, and factories. Land and labour market rigidities slow investment and job creation when people need work the most. State-owned enterprises that control key inputs like electricity and fuel must also be part of a serious reform agenda.

Usually, a government has a reform window of three to six months after coming to power. A crisis of this scale opens another window of three to six months. People understand that change is necessary when their lives and livelihoods are at stake. If the Government chooses to lead, Ditwah can be not only a tragedy but also a turning point for building a stronger, fairer, and more resilient Sri Lankan economy.