Cyclone Ditwah caused an estimated $4.1 billion in damage, equal to about 4% of GDP in 2024, according to the World Bank’s Global Rapid Post-Disaster Damage Estimation (GRADE) report. In response, the government has announced a recovery programme funded through Rs1.2 trillion from the Treasury’s cash buffer, alongside $500 million in support from international donor agencies. At current exchange rates, the combined funding amounts to about $4.3 billion.
The bulk of the destruction was concentrated in infrastructure, with damage estimated at $1.7 billion, about 42% of all losses. Roads, bridges, and railways bore much of the impact. About 247 kilometres of main roads were damaged, 40 bridges destroyed, and 70% of the railway network rendered unusable. These failures cut off towns, disrupted supply chains, and slowed the delivery of relief and essentials.
Communities were also hit hard. Housing losses reached $985 million, or 24% of total damage. More than 6,000 homes were completely destroyed, while 112,000 were partially damaged, leaving tens of thousands displaced. The worst devastation occurred in Kandy and Puttalam, where floods and landslides swept through neighbourhoods and made entire areas uninhabitable.
Beyond homes, non-residential properties, both private and public, also suffered heavy losses. The World Bank estimates damage to commercial, tourism, industrial, and mixed-use buildings, as well as schools, hospitals, and other public facilities, at $562 million, or 14% of total damage. More than 1,000 schools and over 100 health facilities were affected, interrupting education and medical services. Even major institutions were hit, with the University of Peradeniya alone reporting damage exceeding Rs3 billion.
The agricultural sector was also deeply affected with damage estimated at $814 million, around 20% of all damages. About 100,000 hectares of paddy were destroyed and another 150,000 hectares damaged. Livestock and poultry farms suffered severe losses, with tens of thousands of cattle and nearly 3 million chickens lost. The World Bank warns these setbacks could worsen rural poverty, deepen food insecurity, and slow recovery in already fragile farming communities.
Where the Damage Fell Hardest
The cyclone’s damage was nationwide but uneven. Kandy suffered the heaviest losses at $689 million, followed by Puttalam at $486 million and Badulla at $379 million. Together, these three districts accounted for almost 40% of national losses. Kegalle and Kurunegala each recorded damage exceeding $300 million, while Gampaha, Nuwara Eliya, and Ratnapura faced moderate but widespread impact. Flooding and landslides across the central highlands and north west cut across both urban and rural zones.
“The bulk of the destruction was concentrated in infrastructure, with damage estimated at $1.7 billion, about 42% of all losses.”
To understand the scale of losses, the World Bank compared the damage with each district’s Total Exposed Value (TEV): the total worth of all buildings and infrastructure that existed before the cyclone. Sri Lanka’s TEV stands at $688 billion, showing the scale of assets at risk nationwide. Much of it is concentrated in the Western Province. Yet its cities lost relatively little in proportional terms. Colombo lost only 0.12% of its total asset base, Gampaha 0.20%, and Kalutara 0.11%.
Further inland, the picture reverses. Kandy, Puttalam, and Vavuniya have smaller capital bases, (collectively less than $75 billion in total value) but took far heavier blows. Kandy lost 1.44%, Puttalam 1.59%, and Vavuniya 2.08% of their assets. Hence, TEV shows that the cyclone’s impact was not only wide-spread but uneven. Wealthier regions lost more in absolute terms, but poorer areas lost more relative to what they had.
Measuring the Depth of Impact
The World Bank’s estimates of Cyclone Ditwah causing $4.1 billion in direct physical damage, only captures the first layer of the cost. The report warns that total economic losses will be far higher once indirect impacts and reconstruction are included. Globally, rebuilding after disasters of this scale has cost between 1.75 and 2.5 times the value of direct damage. Applying that range, according to the World Bank, would lift the potential reconstruction bill to between $7 billion and $10 billion.
The World Bank highlights that the government must now also contend with losses that extend beyond physical damage. These indirect effects are already visible across key sectors. Damage to transport networks has slowed the movement of goods and people, while interruptions to power and water supply hamper recovery efforts. The report stresses that infrastructure failures often create cascading effects: cutting access to markets and essential services, isolating districts, and prolonging recovery.
Further, rural livelihoods have been among the hardest hit, with destroyed farmland, livestock, and roads reducing incomes in already vulnerable communities. These setbacks, the World Bank warns, will require sustained recovery support well beyond the repair of physical infrastructure.
Disbursement of Relief Funding
Following the cyclone, the government has begun direct relief payments in the affected districts. For homeowners, K.G. Dharmathilaka, Additional Secretary of the Disaster Management Division at the Ministry of Defence, shared that cleanup allowances of Rs25,000 have already reached 88% of affected households. Payments under the Rs50,000 resettlement allowance are designated to help affected families replace essential household items, while housing compensation grants of up to Rs5 million are allocated for rebuilding or repairing homes.
The government has also directed Rs106.2 million towards private sector recovery, through industrial grants managed by the Ministry of Industry and Entrepreneurship Development. The first phase has provided assistance to 531 registered manufacturers across 12 districts, each receiving a one-time payment of Rs200,000.
“Kandy suffered the heaviest losses at $689 million, followed by Puttalam at $486 million and Badulla at $379 million. Together, these three districts accounted for almost 40% of national losses.”
In the agriculture sector, the Department of Agriculture reports that payments have already been made to 66,965 paddy farmers and 16,869 farmers cultivating other crops. Around Rs4.98 billion has been disbursed for 33,215 hectares of damaged paddy land, while an additional Rs670 million has been paid as compensation for losses to vegetables, fruits, and other food crops, covering about 3,700 hectares.
The Rs1.2 Trillion Test of Fiscal Resilience
President Anura Kumara Dissanayake told Parliament that approximately Rs1.2 tril- lion will be spent from the Treasury cash buffer on recovery from Cyclone Ditwah, describing it as one of the country’s largest reconstruction programmes in decades. His remarks came as Parliament approved an additional Rs500 billion in funding for 2026 that will support infrastructure, housing, and livelihood programmes.
A. K. Seneviratne, Deputy Treasury Secretary, later outlined how the money will be deployed as the recovery plan spans 3 years till 2028. Immediate spending in December 2025 focused on immediate relief and essential repairs, followed by major allocations in 2026 and 2027 for infrastructure and livelihood recovery. The programme’s final phase will strengthen community resilience and restore long-term economic activity in the most affected districts.
“Officials expect the rise in expenditure to temporarily breach the 13% primary spending ceiling in 2025, before returning to within limits by 2027.”
The government is coordinating disbursements through supplementary budgets and reallocated spending to maintain fiscal control across the three year plan. Officials expect the rise in expenditure to temporarily breach the 13% primary spending ceiling in 2025, before returning to within limits by 2027. Recent tax reforms, projected to add 0.3% of GDP in new revenue, will also help offset part of the recovery cost while maintaining fiscal discipline on the road to recovery.
Foreign Financing: Limited but Strategic
President Anura Kumara Dissanayake also told Parliament that $500 million in additional funding would be sought to mitigate the impact on the exchange rate. Speaking to the Committee on Public Finance, A. K. Seneviratne, Deputy Treasury Secretary, elaborated that, “there is a foreign exchange issue,” adding that donor agencies had already committed $350 million beyond the 2025 budget and that “more will follow.”
In response, the IMF approved $206 million under its Rapid Financing Instrument (RFI) to address short-term balance-of-payments pressures. Kenji Okamura, IMF Deputy Managing Director, said the cyclone had created “urgent humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments needs. The emergency financial support provided by the IMF under the RFI will help address these pressures.”
The World Bank has also activated $120 million from emergency components of existing projects, while the ADB and other development partners have pledged about $500 million in additional support through 2026. Combined, these inflows are expected to cover the $720 million balance-of-payments gap identified by the IMF and limit the decline in reserves to about $115 million.
The Real Test Begins Now
The funding lines are defined, the approvals secured, and the spending phased across three years. But the next challenge lies in execution. As Raj Prabu Rajakulendran, Lead Economist at Verité Research points out, “we’re often good at building supplementary packages, but the question is whether the money actually gets to the people.” His concern is not about design but delivery, and about whether a recovery financed mostly through loans can remain sustainable in a tight fiscal space. The IMF, World Bank, and ADB support comes as concessional credit, not grants, which means repayment pressures will follow in the next cycle.