The tsunami that hit Sri Lanka on December 26, 2004 caused the worst devastation from a natural disaster in the country's history. While the human and asset losses from the tsunami were extensive, the impact on output and GDP will be limited because the sectors affected only represent a small part of national production. The international community has come to Sri Lanka's aid with unprecedented levels of financial assistance, particularly from private donors. While substantial financial resources have been committed, implementation will be a major challenge. Capacity constraints will limit the speed in which assistance can be delivered. Better and more durable coordinating mechanisms will need to be developed to ensure that aid is effectively channeled to the affected areas. Furthermore, aid flows need to be managed in a way that is consistent with overall macroeconomic stability. Source: The Tsunami: Impact, Responses, and Issues