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Sri Lanka has appealed for at least Rs 31 billion in international assistance after catastrophic floods inflicted widespread damage across the island, destroying farmland, breaching irrigation systems and derailing the government’s attempts to stabilise the economy.
The request comes as Sri Lanka’s Colombo Stock Exchange (CSE) registered a two-month low, dropping 3.04 percent. “Market dropped by over 600 points, mainly due to the flood situation,” Ranjan Ranatunga, Assistant Vice President – Research at First Capital said. “In my opinion, I think we will continue to see selling pressure,” he said.
According to the Daily Mirror, in a communication issued by the Foreign Ministry on 28 November the government said it requires urgent funding to repair agricultural and irrigation infrastructure that has been devastated by heavy rains and landslides.
The request includes Rs 15 billion for restoring paddy lands and vegetable crops, Rs 4.8 billion for rehabilitating minor irrigation tanks, Rs 900 million for anicuts, Rs 8.3 billion for minor irrigation systems, and Rs 1.8 billion for damaged canals.
The scale of destruction is immense. At least 510,000 hectares of cultivated rice fields have been submerged or washed away. To replant these areas, the government has appealed to international donors for 112,000 metric tonnes of Urea, 30,000 metric tonnes of MOP, and 30,000 metric tonnes of TOP. Since the initial appeal, further structural failures have followed, including the breach of the Mavil Aru dam wall in the Eastern Province.
The disaster has struck communities still recovering from the 2022 economic collapse. The 2023 Multidimensional Vulnerability Index by UNDP and the University of Oxford found that 48 percent of households had limited or no capacity to withstand shocks, leaving them acutely exposed to climate-induced disasters. Families already living on the margins have now lost homes, crops and assets within days.
Economic pressures mounting
The economic fallout from the cyclone arrives as Sri Lanka’s external accounts show renewed strain. The Central Bank’s latest External Sector Performance report indicates that the current account recorded deficits in both September and October, reaching USD 199.5 million in October. Although the cumulative current account still shows a surplus for the first ten months of the year, that surplus has begun to contract sharply.
Imports surged by 26.7 percent year-on-year in October to USD 2.16 billion, outpacing exports, which fell by 0.7 percent. The trade deficit widened to USD 1 billion, almost double that of the previous year. Vehicle imports alone accounted for USD 261 million in October, with cumulative inflows reaching USD 1.46 billion for the year.
Tourism earnings, repeatedly touted as a key pillar of recovery, are also underperforming. Despite higher tourist arrivals, average daily spending has dropped by 13.5 percent, falling to USD 148 per day. Researchers attribute the fall to shifts in post-pandemic travel behaviour, currency depreciation, and tighter spending by visitors. The Sri Lanka Tourism Development Authority also noted that independent travellers, who now stay longer, make up a rising share of arrivals, with women accounting for 58 percent of tourists.
Worker remittances remain one of the few bright spots, with October reporting the highest monthly inflow since December 2020. Yet overall pressures on the external sector remain significant. The rupee has depreciated five percent against the US dollar this year, and foreign investments in the Colombo Stock Exchange recorded net outflows in October.
Reserves under pressure
With USD 435 million in external debt servicing obligations falling due in the final quarter of 2025, economists warn that Sri Lanka’s ability to maintain foreign exchange reserves is becoming increasingly uncertain. Even with expected IMF and ADB inflows, the combined impact of agricultural collapse, infrastructure damage and declining export competitiveness is likely to strain Colombo’s financial position.
Cyclone Ditwah has already resulted in hundreds of deaths and more than a million people affected across the island, according to initial assessments. Entire districts remain flooded, major roads and bridges have been destroyed, and thousands of families have been displaced. With the full extent of the damage yet to be determined, Sri Lanka’s recovery will be long and costly.
As the government seeks billions in international support, the crisis has exposed the fragility of the island’s economy and the deep vulnerabilities of communities still grappling with years of economic mismanagement, austerity and climate-driven disasters.