The Gulf Cooperation Council (GCC) and the International Monetary Fund (IMF) have called for enhanced fiscal and monetary coordination to bolster economic resilience amid significant shifts in global energy, trade, and technology. This announcement was made during a joint meeting of GCC finance ministers and central bank governors, which included Khaled Mohamed Balama, Governor of the Central Bank of the UAE, and IMF Managing Director Kristalina Georgieva, held in Manama, Bahrain, as reported by the Emirates News Agency.
The meeting focused on the economic outlook for GCC countries and the need for aligned fiscal and monetary policies to ensure macroeconomic stability. Participants discussed strategies to sustain growth, promote economic diversification, and support technological innovation while maintaining financial stability.
At the conclusion of the discussions, the participants underscored the importance of cooperation between GCC nations and the IMF. They highlighted the need to strengthen macroprudential frameworks, enhance financial risk management tools, and improve transparency in fiscal and monetary policies.
Strengthening Economic Foundations
Recent data indicates that GCC economies are entering a period of global disruption with robust fundamentals. The IMF noted that commercial bank assets in the region exceeded $4 trillion by mid-2026, reflecting a 3.9% increase from the previous year. Additionally, net foreign assets held by GCC central banks reached approximately $829 billion, providing about 11 months of import cover.
Georgieva remarked that the stability provided by exchange-rate pegs has been crucial, and the Gulf banking systems remain well-capitalized. Strategic investments in energy and logistics infrastructure have also mitigated the impact of disruptions affecting regional energy supplies.
Despite these strengths, the IMF cautioned that the economic impact of recent disruptions remains significant, particularly on oil and gas exports. The Fund anticipates a contraction in the overall GCC economy for 2026, followed by a potential recovery in 2027, contingent on the normalization of shipping conditions.
Enhancing Trade Resilience
The discussions also highlighted the critical link between macroeconomic resilience and physical trade infrastructure. The IMF emphasized that fiscal reserves alone cannot fully shield economies from major trade interruptions. It pointed to the GCC Railway and Saudi Landbridge projects as vital for reducing economic losses associated with potential closures of the Strait of Hormuz.
Furthermore, the GCC Financial and Economic Cooperation Committee reviewed progress on economic integration, including the Common Market and payment system linkages across member states. Secretary-General Jasem Albudaiwi stated that greater integration of Gulf markets and infrastructure would enhance the region’s ability to absorb external shocks.
Digital Finance and Innovation
Technology is increasingly pivotal in the GCC’s economic transformation. The IMF reported a surge in digital financial activity, with total on-chain digital asset transactions rising from $6 billion in 2020 to $92 billion in 2024. This growth presents opportunities for improved payment efficiency and capital market innovation.
However, the rapid adoption of digital finance also introduces macro-financial and regulatory risks. The IMF stressed the need for stronger legal and regulatory frameworks to manage these risks effectively. The discussions in Manama positioned fiscal and monetary coordination as essential to achieving sustainable long-term growth in the region.
For further details, visit the full report on Economy Middle East.
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