News & market updates

A group of 120 economists, including Joseph Stiglitz, urged suspension of Sri Lanka's external sovereign debt payments and a new restructuring after Cyclone Ditwah, saying last year's $9bn debt deal and limited fiscal space are overwhelmed by reconstruction needs. Sri Lanka has requested a $200m IMF emergency loan.

Leading academics, including Joseph Stiglitz, called for Sri Lanka to suspend external sovereign debt payments and seek a new, deeper restructuring after Cyclone Ditwah, arguing the IMF's 17% NPV relief under the EFF is insufficient. The cyclone displaced ~1.4m people and left nearly 800 dead or missing, heightening fiscal and debt sustainability risks noted by the IMF.

M.G. Hemachandra has been appointed Chairman of the Urban Development Authority (UDA). He is a development expert and former Senior Specialist and Chief of Loan Projects at JICA in Sri Lanka, with extensive experience in development policy, project design, procurement and governance.

IMF and officials say Cyclone Ditwah will likely cause a temporary GDP hit in 2026, probably concentrated in one quarter, with reconstruction expected to partly offset the output loss but push short-term inflation and widen the current account. Some distilleries were reported flooded, hurting production and revenues.

Sri Lanka will spend about 1,000 billion rupees (around US$3.5bn) on Ditwah relief and recovery over three years, the Deputy Treasury Secretary said. The package includes ~Rs75bn in Dec 2025, Rs500bn approved for 2026 and Rs300–350bn for 2027–28 (with ~Rs400bn for livelihood support), and will breach the 13% of GDP primary spending limit in 2025 by about 1.4%.

Parliament approved an uncontested Rs. 500 billion 2026 supplementary estimate for post‑Ditwah relief and recovery, allocating Rs.100bn for housing, Rs.250bn for infrastructure repairs and Rs.150bn for livelihoods. Officials said the spending breaches the PFM Act primary‑expenditure 13% of GDP ceiling by about 1.5% but is allowed for disasters and CoPF approved after examining implementation.

IMF Executive Board approved SDR150.5m (about $206m) in emergency RFI financing for Sri Lanka to address cyclone-related balance-of-payments and fiscal pressures; the EFF fifth review is deferred and discussions will resume in early 2026.

Treasury says Cyclone Ditwa relief donations rose to Rs. 4,286 million (Rs. 4,263m in rupee deposits; US$13.86m equivalent), with foreign-currency donations over US$6m. Multilateral institutions are considering additional assistance for rebuilding.

IMF Executive Board approved SDR150.5m (about US$206m) in emergency RFI financing for Sri Lanka to address urgent balance-of-payments and fiscal pressures from Cyclone Ditwah. The Fifth Review under the IMF's EFF has been deferred and discussions will resume in early 2026.

IMF approved US$206 million in emergency RFI financing for Sri Lanka to address urgent balance-of-payments and fiscal needs from Cyclone Ditwah and preserve macroeconomic stability. The Fifth Review under the EFF is deferred and an IMF mission will visit in early 2026 to resume discussions.

Sri Lanka will use a Rs1,202 billion Treasury cash buffer for cyclone relief and recovery and seek parliamentary approval for an additional Rs500 billion in 2026. Allocations include Rs250bn for infrastructure, Rs150bn for business recovery and Rs100bn for relief/housing, and the government expects an extra $500m from IMF/WB/ADB to limit exchange-rate and inflation impact.

The Civil Appellate High Court on 11 Dec 2025 refused leave to appeal and interim enjoining orders, allowing Home Lands to continue construction of the BOI-approved Pentara Residencies in Thummulla. The project is backed by Hatton National Bank PLC, which provided large-scale funding for land acquisition.

SJB MP S.M. Marikkar criticised the Government's Rs. 500 billion Supplementary Estimate for post-Ditwah recovery, saying the RDA alone needs Rs. 190 b and the CEB Rs. 50 b and that unofficial infrastructure damages may exceed Rs. 900 b.

Civil Appellate High Court refused injunctions, clearing Home Lands’ Rs.30–35bn BOI-approved Pentara Residences project to proceed. The project is backed by Hatton National Bank (HNB.N0000), includes a record Rs.4.5bn land purchase, and has required statutory and environmental approvals.

Allianz SE will donate €200,000 to support Sri Lanka flood relief—€100,000 to the Sri Lanka Red Cross and €100,000 for post-disaster recovery and climate-resilience work via Allianz Insurance Lanka and local partners—part of a €600,000 Southeast Asia relief package.

Sri Lankan developers won multiple titles at the 2025 PropertyGuru Asia Property Awards: Home Lands Group was named Best Developer and Best Lifestyle Developer, and its Santorini, Bayfonte and Pentara projects won top condo and waterfront awards.

The European Union allocated Euro 2.35 million in humanitarian aid to Sri Lanka (Euro 500,000 via IFRC; Euro 1.85 million via ECHO partners) and delivered 83 tonnes of in-kind relief by air after Tropical Cyclone Ditwah. The EU also activated Copernicus mapping and Italy provided structural engineers to support recovery.

Government will convene an international donor conference in January to mobilise funding for post-Cyclone Ditwah recovery; preliminary damage estimates are $6–7 billion and the Rebuilding Sri Lanka Fund has received over Rs.4.06 billion so far.

China's NPC Standing Committee Vice Chairman Wang Dongming pledged full support to Sri Lanka's recovery from Cyclone Ditwah, and Sri Lanka requested Chinese technical assistance to restore and reconstruct its damaged railway network.

Sri Lanka will spend Rs115 billion on slope protection for major roads damaged by Cyclone Ditwah; total repair and improvement costs are estimated at Rs190 billion and the government is seeking Rs500 billion for relief and recovery (Rs250 billion for infrastructure).

A Sri Lankan construction services delegation visited Mumbai 25–28 Nov 2025, holding about 350 engagements and securing business collaborations with Indian partners. Ten Sri Lankan firms in construction, engineering, interior design and property development participated in an EDB-led programme with the Sri Lanka Consulate and Indian industry bodies.

Home Lands was crowned "Best Developer, Sri Lanka" for a third consecutive year and also won "Best Lifestyle Developer, Asia" at the PropertyGuru Asia Property Awards 2025. The group has delivered over 3,400 residential units and has about 2,300 units currently under construction.

Commercial Bank of Ceylon signed an MoU with Overseas Realty to offer tailored home loans covering up to 100% of the purchase price for buyers of Mireka Seascape. Mireka Seascape is a 168-unit beachfront residential development in Dodanduwa.

International Construction Consortium has launched ICC Durra Dry Wall Partitions, a lightweight, modular, eco-friendly dry wall system offering sound insulation, fire resistance, faster installation and lower labour costs for residential, commercial and institutional projects.

Sri Lanka forecasts GDP growth of more than 5% in 2026, driven by post-Cyclone Ditwah reconstruction and planned capital spending. The government cited incoming donor/IMF support and said a $3.4bn Sinopec refinery deal is near finalisation to help spur investment.

IMF Executive Board will review Sri Lanka’s request for SDR 150.5m (about USD 200m) under the Rapid Financing Instrument on Dec 19, 2025, to meet immediate balance-of-payments needs after Cyclone Ditwah; approval would provide rapid emergency financing for recovery and rebuilding.

Government will hold a special Parliament sitting on 18–19 Dec to seek approval for a Rs. 500 billion 2026 supplementary estimate to fund disaster relief, infrastructure rebuilding and housing after Cyclone Ditwah. Nearly Rs.16 billion has been disbursed so far under the Rs.25,000 allowance program, reaching about 50% of affected households, with initial payments expected to be completed within a week.

The Cabinet approved raising the cost estimate for the Lower Malwathu Oya Multi-Purpose Development Project to Rs.47.18 billion and extended the completion date to 31 December 2030. Implementation will be locally funded and the project aims to expand irrigation across about 30,000 acres, add hydropower and improve drinking water.