Government revenue is not likely to take a hit as foreign aid floods in.

Government revenue is not expected to take too much of a hit as donors pledge over US$ 1 bn in foreign aid to re-build tsunami stricken areas along the coast. Government revenue is not expected to take too much of a hit as donors pledge over US$ 1 bn in foreign aid to re-build tsunami stricken areas along the coast. “The overall estimate at this stage on the effect of GDP is about three to three and a half percent. We don’t see a significant effect on government revenue because there is a huge inflow of foreign aid,” Mano Tittawella, Chairman, Strategic Enterprise Management Agency (SEMA) said.

The Central Bank however is optimistic it can contain the economic cost to less than one percent of GDP.

The pledges, when they materialise, are expected to stoke a mammoth building programme to rehabilitate housing and infrastructure along the island’s coastal regions.

Early estimates of reconstruction costs have been put at US$ 1.3 bn to US$ 1.5 bn, though the figure is expected to go up as more detailed damage assessments are done.

The government estimates the impact of the tsunami at around three percent of national GDP due to damages to livelihoo