The Word Bank has identified Kenya’s response to internal and external shocks that the economy experienced last year as a key challenge in addressing poverty.

This is contained in the latest annual Country Policy and Institutional Assessment that rates the performance of all developing countries on poverty reduction.

According to the assessment, Kenya scored 3.8 last year, the same level as in 2010.

The new assessment indicates that Kenya has improved the policy environment for poverty reduction in the face of the difficult economic environment in the global economy.

The annual Country Policy and Institutional Assessment rates the performance of all developing countries in 16 indicators covering four areas comprising economic management, structural policies; policies for social inclusion and equity; as well as public sector management and institutions.

Countries are rated on a scale of 1 (low) to 6 (high) for each of the 16 indicators. An overall CPIA score reflects an average for the 16 indicators combined.

World Bank country director Johannes Zutt says Kenya recorded improvements in key indicators such as debt management, legal, regulatory and infrastructural framework to support financial outreach and services.

The country also scored highly in ratings for social protection and labor, fiscal reporting and access to information on public affairs.

However, the Bank says the way Kenya handled the macro-economic challenges experienced last year, which saw inflation and exchange rates rise to record highs, wiped out gains achieved in other areas to maintain the 3.8 score.

Zutt said, “The challenge for Kenya during the year was monetary policy, which lagged in responding to the internal and external shocks that the economy experienced.”

Central bank governor Njuguna Ndung’u and treasury mandarins have been facing accusations of failing to act to tame the shilling that hit a high of 107 against the dollar in October last year.

Prof. Ndung’u is also blamed for the rise in interest rates from commercial banks after he raised the central bank rate to 18 percent to tame the runaway inflation last year.

The World Bank has called on Kenya to do more in public sector management so as to support its growth to Middle Income Country status.

Kenya Broadcasting Corporation