The Development Policy Operation (DPO) will help Nairobi institute a series of three-pillar policy reforms.
In a press release sent to APA on Tuesday, the Board of Directors of the World Bank Group announced that it had approved a $1 billion Development Policy Operation (DPO) for Kenya.
The funds are intended to provide low-cost budget financing as well as support for key policy and institutional reforms for the short-term goals of fiscal consolidation as well as the long-term objective of green and inclusive growth.
OPD will help Nairobi institute a series of policy reforms across three pillars. The first will target the creation of fiscal space in a sustainable and equitable manner, including revenue and expenditure measures to support fiscal consolidation, strengthening the debt management framework and protecting pro-poor spending.
These will be complemented by a second set of reforms that improve competitiveness to boost agricultural exports which is both a flagship sector where the country has a clear comparative advantage and the
sector that employs most of the poor.
Transparency and accountability will be strengthened through a third wave of reforms aimed at improving governance and financial inclusion for private-sector-led growth by building private-sector confidence in
the government’s commitment to a level playing field.
Each of the three pillars contains actions to combat climate change and improve inclusion, important cross-cutting axes of the operation, says the note.
In agriculture, they will reduce distortions in agricultural markets by eliminating administrative price-fixing for public procurement cereals. They will also create an institutional framework for effective agricultural land and water management by approving the National Land Management Policy.
Supporting Kenya’s agricultural exports by improving phytosanitary and food safety standards is equally essential, the document stresses.
In terms of governance, OPD supports an important set of initiatives aimed at promoting objective decision-making through the Conflict of Interest Bill, streamlining the orderly exit of the state from commercial investments by amending the Privatization of Public Enterprises Act.
“The government’s reforms, supported by OPD, will help achieve fiscal consolidation, which is essential to reduce the debt burden and associated risks, in a fair and sustainable manner by preserving social spending while supporting much-needed revenue and expenditure measures,” Aghassi Mkrtchyan, Senior Economist for the World Bank in Kenya was quoted as saying in the document.
He added that “the operation combines these measures with important initiatives to improve the productivity and exports of Kenya’s agricultural sector, and governance reforms for more inclusive and green growth driven by private investment.”
ARD/ac/fss/abj/APA