With Sri Lanka facing recurring floods and cyclones that have inflicted billions of rupees in damage, the World Bank is recalibrating its assistance strategy for 2025 and 2026 to address both immediate recovery needs and long-term economic resilience. Senior World Bank officials visiting Colombo this week reviewed ongoing development programs amid growing concern that climate shocks are undermining fiscal stability and slowing growth.
The Ministry of Finance said discussions focused on how World Bank–supported initiatives could be strengthened to better support national development goals. While Sri Lanka has made progress in stabilizing its economy, officials acknowledged that disaster-related losses have placed additional strain on public finances, infrastructure, and social services.
World Bank Executive Director Parameswaran Iyer emphasized job creation as a central objective of future assistance, noting that employment losses often follow large-scale floods and cyclones. Priority sectors identified by the Bank include transport and energy infrastructure, agribusiness, healthcare, tourism, and value-added manufacturing. These sectors are expected to absorb displaced workers while boosting productivity and export potential.
Tourism, a major foreign exchange earner, has been particularly vulnerable to extreme weather, with floods damaging access roads and facilities in key destinations. Similarly, repeated flooding has affected agricultural output, raising food prices and threatening rural livelihoods. World Bank-backed agribusiness and value-chain investments are seen as vital to restoring stability in these sectors.
Discussions with Treasury Secretary Harshana Suriyapperuma also addressed social development and institutional capacity building. Officials highlighted the need to strengthen safety nets for communities most affected by climate disasters, while improving public institutions’ ability to plan, finance, and implement resilient projects.
Policy experts note that the World Bank’s engagement reflects a broader shift toward climate-responsive development financing. Rather than focusing solely on post-disaster reconstruction, the emphasis is increasingly on building systems that can withstand future shocks, reducing long-term economic losses.
As climate risks intensify across South Asia, Sri Lanka’s experience is emerging as a test case for how development finance can support recovery while preparing economies for an uncertain future. The World Bank’s expanded role in 2025–2026 is expected to be pivotal in shaping whether Sri Lanka’s recovery remains vulnerable or becomes resilient
