The storm also disrupted air traffic and other essential services.
The schools in the Central, Western and Southern provinces were closed.
Many houses were partially damaged, mainly in the central hill districts, and power supplies have been hit.
At least seven people have been killed due to heavy rains and gusty winds which swept through most parts of the island last night, police said.
Nearly 20,000 affected and five people are missing as of this afternoon following the heavy rains.
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Addressing Parliament, Prime Minister Ranil Wickremesinghe said that he had directed officials to pay each family affected by bad weather rupees 10,000 as emergency assistance.
"Heavy rains, Gusty strong winds about 60-70 kms per hour can be expected over the island and rough seas can be expected further in the deep and shallow sea areas around then island too," a statement from the meteorological department said.
The military has been deployed to assist in the rescue and recovery operations.
Prime Minister Ranil Wickremesinghe said that the affected families will be given compensation.
It is likely to develop in to a cyclonic storm within next few hours and move further away from the island. As a result its effects on the country is expected to lessen gradually by tomorrow.
In the landslide prone central hill areas, measures have been taken to evacuate people, disaster management officials said.
The public has been asked to remain vigilant as the water levels in the rivers were rising.
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