Paper
Economic Challenges of Post-Tsunami Reconstruction in Sri Lanka
How can a country best recover from a debilitating disaster?
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40 pages
This paper emphasizes the need for formulation of a phased program of reconstruction after a natural disaster. The paper:
- Analyzes the priority issues emerging from Sri Lankas experience of post-tsunami reconstruction and rehabilitation;
- Aims to contribute to the discussions and debates on appropriate policies for the medium-term reconstruction effort;
- Draws on a survey of affected households in an attempt to obtain a broader understanding of the perceptions of the recovery process at the grass-roots level.
The paper states that:
- After successful emergency relief operations, Sri Lanka initiated post-tsunami reconstruction with confidence and expected rapid recovery, however, these expectations turned out to be overly optimistic;
- Coordination problems between agencies, constraints on aid absorption capacity, and inequities in aid distribution among regions have hampered reconstruction;
- Infrastructure reconstruction targets have not been fully met;
- Initial expectations that the tsunami experience would lead to peace were not fulfilled and large-scale conflict has resumed;
- Macroeconomic management and efficient absorption of a large, necessarily temporary, inflow of foreign funds has been a daunting task;
- Construction costs have rapidly escalated, producing unanticipated funding gaps and aggravating fiscal deficit problems.
The paper concludes that the Sri Lankan experience highlights the need for:
- Anticipation of such cost increases when assessing needs following major disasters;
- Formulation of a phased program of reconstruction which takes into account the supply side constraints of construction inputs.
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