The Middle East Crisis took center stage during International Monetary Fund discussions with Treasury Cabinet Secretary John Mbadi in meetings held between February 24, 2026, and March 4, 2026.
A team from the Fund’s Washington headquarters, led by Haimanot Teferra, arrived in Kenya the previous week to engage with Kenyan government officials regarding recent economic developments both locally and globally.
The team discussed the potential impacts of the Middle East conflict between the United States, Israel, and Iran.
The situation continues to intensify following coordinated military action by the United States and Israel targeting Iranian sites and resulting in the death of Iran’s Supreme Leader, Ayatollah Khamenei and senior government officials.
Tehran responded with retaliatory strikes, expanding the confrontation and raising concerns about a broader regional conflict.
Due to the crisis, the IMF team urged the Kenyan government to strengthen fiscal discipline, enhance fiscal credibility, and implement measures to protect citizens from external shocks.
“These efforts should be supported by strengthened governance and greater public sector efficiency,” the statement partially read.
Accompanying Mbadi, the Kenyan delegation included Central Bank of Kenya Governor Kamau Thugge, officials from other ministries and independent oversight bodies, as well as representatives from civil society organizations, the financial sector, private businesses, and development partners.
During the Ramadan period, the Israel-Iran war has led to flight cancellations to the Middle East region. Meat exporters report facing potential losses of Ksh.1 billion since the conflict began.
Other sectors, including tea, have also raised concerns about the war’s effects, noting that the potential risks could cause the country to lose a quarter of its market in the Middle East.
“We will lose 20-25 percent of our tea market in the Middle East if the war continues,” stated George Ouna, Director of The East African Tea Traders Association, recently.
Prior to the discussions, CS Mbadi had dismissed allegations about the meeting’s purpose, emphasizing that the talks would focus on technical details.
The government had formally requested a new support program after its previous Ksh.465 billion agreement concluded last April.
Kenya’s decision to terminate the IMF program resulted in the cessation of the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements, leaving only the Resilience and Sustainability Facility (RSF) as the active program.
The EFF and ECF programs were designed to provide financial assistance to countries experiencing difficulties reducing inflation levels due to structural issues that require time to address.
The EFF program allows a country four years for restructuring, while the ECF can be extended to five years.
Conversely, the RSF program supports a country’s climate agenda. In April 2021, the IMF entered into an agreement with Kenya to disburse Ksh.467.5 billion under the EFF/ECF arrangement.
Kenya accessed Ksh.404 billion, declining the remaining Ksh.63.4 billion following the program’s termination.