Politics and policy
Kenya’s progress on reforms attracts World Bank funding
Posted Monday, July 2 2012 at 21:56
Kenya’s administrative reforms are set to pay off with the World Bank planning to give the government money under a programme for poor countries.
Kenya was placed third in Africa, under the policy and institutional reforms category, positioning it for increased allocation under the bank’s International Development Association (IDA) programme.
“The Country Policy and Institutional Assessment (CPIA) score is one of the factors the World Bank uses in its formula for allocating IDA to countries. The higher the score the higher the funds received,” John Randa, the World Bank economist for Kenya, said yesterday at a media briefing in Nairobi.
Last week, the World Bank released CPIA ranking for 2011 showing that Kenya had a score of 3.8 out of the possible six points and above Africa’s average of 3.2 points.
The ongoing implementation of the new Constitution and the open data initiative top the list of reforms that have lifted Kenya’s overall CPIA ranking.
“These reforms together with prudent macro-economic policy will help Kenya to respond to external shocks such as the unfolding euro crisis,” said Shantayanan Devarajan, the World Bank Chief Economist for Africa.
The assurance that the improved rating will boost disbursement of concessionary funds comes at a time when the government is struggling to finance its Budget from domestic resources.
Implementation of the Constitution, next year’s General Election, and establishing of devolved structures are among key votes expected to put pressure on government finances in the next three years.
IDA provides interest-free loans and grants to the poorest countries, easing pressure on governments’ borrowing from domestic markets and helping stabilise interest rates.
Yesterday, the Treasury maintained that new financing taps opened by the World Bank would not compromise the country’s debt policy.
Geoffrey Mwau, the Treasury’s economic secretary, said that the government was determined to hold its external debt level at less than 50 per cent of the gross domestic product.
“A debt level of 50 per cent or below is sustainable and reflects the feedback that we keep receiving from citizens,” Mr Mwau said during the media launch.
Kenya’s external debt stands at 47 per cent of GDP. The country is one of a few in Africa which has never been considered for external debt relief because it has managed the repayment without compromising the financing of flagship infrastructure projects, said Mr Devarajan.
The World Bank said it had slashed its IDA fund commitment for the year to $14.7 billion from $16.3 billion last year.