Post-tsunami recovery and reconstruction strategy

Sri Lanka is one of the two countries that were hardest hit by the Tsunami tidal waves that ravaged several countries in the Indian Ocean Rim on December 26, 2004. The Tsunami caused extensive damage and disruption to human life, livelihood, infrastructure, private and public property and economic and social activities in Sri Lanka.

While the sectors affected by the Tsunami do not constitute a large portion of GDP, the most affected Provinces (Northern, Eastern and Southern) constitute about 18 percent of national GDP and about 25 percent of the population of Sri Lanka. Between 25 percent and 33 percent of the population in the affected Districts live below the national poverty line. Thus the Tsunami has increased the vulnerability of a large proportion of the very people (fishermen, farmers, and small enterprises and service providers in the tourism sector) whose incomes were to be uplifted under the government’s poverty reduction programme. The fisheries assets, residential houses, schools, hotels, railways, roads, electricity, ports, health institutions, private commercial buildings on which so many of the vulnerable people depend were severely affected.

By itself, the fisheries sector, along two thirds of the Sri Lankan coastline, has suffered enormous loss. The number of deaths of fishermen has been estimated at around 7500. Rehabilitation and resettlement of the remaining families needs to be done with utmost urgency. There may also be a need to voluntarily relocate families from the costal belt to nearby safer places. This involves compensation payments for land acquisition. Around 80,000 houses and private commercial buildings have been fully or partly damaged.

There has been considerable damage to the hotels sector with an immediate impact on tourism. The industry is hopeful that the recovery would be faster with timely assistance. Nevertheless, with a reduction in the number of tourists, a net foreign exchange loss of about US$ 50 million is projected in 2005, which is critical in the context of high cost of petroleum imports. Both the formal and informal financial sectors were affected by the Tsunami. Several commercial bank branches in the coastal areas were directly affected by the Tsunami disaster. The micro finance sector is likely to have been strongly and adversely affected by the Tsunami with the disruption of many micro enterprises.