The International Monetary Fund expects the Gulf Cooperation Council economy to contract in 2026, while its banking systems remain well capitalised and liquid. UAE lending grew faster than deposits, and Saudi Arabia’s 2027 fiscal plans maintained development spending despite a projected budget deficit.

Qatar’s planned Euroclear link would widen international access to domestic government debt, while NEOPAY’s proposed acquisition of noon payments would expand its regional merchant reach. Lebanon’s bank resolution law faces constitutional review, adding uncertainty to reforms required for IMF support.

Read more on the week’s key developments:

1. IMF expects GCC contraction despite strong banking buffers

The International Monetary Fund said on 1 October that it expects the Gulf Cooperation Council (GCC) economy to contract in 2026, reflecting a sharp drop in hydrocarbon production and a marked slowdown in non-hydrocarbon growth amid regional conflict. In remarks to GCC finance ministers and central bank governors, IMF Managing Director Kristalina Georgieva said banking systems remained well capitalised and liquid, while exchange-rate pegs continued to anchor stability and confidence.

The IMF projects a strong GCC recovery in 2027, conditional on shipping gradually normalising, but warns that prolonged or more severe disruptions could delay it. Georgieva advocated temporary, targeted support calibrated to countries’ fiscal space and cautioned that broad stimulus could fuel inflationary and external pressures where supply disruptions were the main constraint.

2. UAE bank lending grows 18.8% as asset quality improves

UAE bank lending increased 18.8% year-on-year at end-August 2026, outpacing deposit growth of 13%, according to figures reviewed by the Central Bank of the United Arab Emirates on 5 October. The non-performing loan ratio declined to 2.6%.

Credit expansion continued alongside measures to sustain financing amid regional disruption. Payment deferrals and fee waivers under the Financial Institutions Resilience Package covered AED 15.9 billion ($4.3 billion) of loans, with businesses accounting for approximately 86% of the value supported. Launched in March, the package also provides liquidity and capital-buffer flexibility intended to maintain banks’ lending capacity.

3. Saudi fiscal plans sustain financing demand as public-enterprise credit grows

Saudi Arabia’s Ministry of Finance published its 2027 pre-budget statement on 30 September, projecting expenditure of SAR 1.392 trillion ($371.2 billion) and revenue of SAR 1.202 trillion ($320.5 billion). It estimated a deficit equivalent to 3.6% of gross domestic product, with spending continuing on development priorities and strategic projects.

The fiscal plans coincide with faster credit growth to public-sector enterprises. Saudi Central Bank data showed this credit increasing 18.4% year-on-year at end-August, compared with approximately 6% growth in private-sector bank lending, calculated from the central bank’s figures. The ministry said it would continue domestic and international borrowing through bonds, sukuk and loans, alongside project and infrastructure financing.

4. Lebanon’s banking reforms remain central to securing IMF support

The International Monetary Fund said on 1 October that an IMF-supported programme with Lebanon requires the Bank Resolution Law to enter into force, an appropriate Financial Gap Law consistent with international standards and sustainable fiscal plans for 2027 and the medium term. The Fund endorsed amendments approved on 12 August, but said President Joseph Aoun had referred the law to the Constitutional Council. It would assess any resulting changes against international standards.

The reforms address the banking crisis that erupted in 2019, leaving depositors unable to access much of their savings. The Bank Resolution Law provides a framework for resolving or liquidating troubled banks, while separate legislation must establish loss allocation and deposit repayment. In September, the IMF said shareholders and junior creditors must absorb losses before depositors, and repayments must remain consistent with banking-sector viability and public-debt sustainability.

5. Qatar announces Euroclear settlement link for government debt

Qatar Central Bank and Euroclear announced on 5 October that they will establish an international settlement link making eligible Qatari riyal-denominated government bonds and sukuk accessible through Euroclear Bank. Euroclear Bank will act as issuer central securities depository, while Edaa, Qatar’s central securities depository, will serve as investor central securities depository for local investors. Qatar Central Bank will act as issuer and paying agent.

The link extends international settlement access to Qatar’s domestic government debt market. The partners expect broader investor participation to improve liquidity and market efficiency, supporting Qatar’s financial-sector strategy to build a more globally connected capital market. Saudi Arabia established a similar link with Euroclear in 2022, allowing international investors to settle domestically issued debt through their existing Euroclear accounts.

6. NEOPAY to acquire 65% controlling stake in noon payments

UAE payments provider NEOPAY entered into a definitive agreement on 5 October to acquire a 65% controlling stake in noon payments, the payments arm of regional e-commerce group noon. The combination would bring together NEOPAY’s merchant acquiring and payment acceptance capabilities with noon payments’ embedded payments platform, e-commerce gateway and merchant relationships across the UAE, Saudi Arabia and Egypt. Completion remains subject to regulatory and antitrust approvals.

NEOPAY originated within Mashreq, which completed the sale of a majority stake to investment firm Arcapita and payments technology provider DgPays in January 2025 while retaining a significant minority interest. Regional expansion was part of that partnership’s stated strategy. The acquisition would advance that plan by extending NEOPAY’s reach into Saudi Arabia and Egypt and strengthening its online payments business alongside its in-store acquiring capabilities.

7. MNT-Halan plans 20% listing of Egyptian business

MNT-Halan, a technology-enabled lender and payments provider, announced on 1 October plans to list its Egyptian business, MNT Tech Holding for Financial Investments, on the Egyptian Exchange. Parent MNT Investments B.V. will offer 320 million existing shares, representing 20% of issued capital, through institutional and public tranches. Completion is expected during October, subject to approvals and market conditions. Commercial International Bank announced on 5 October a cornerstone commitment to purchase shares worth up to EGP 2 billion ($38.2 million) in the international tranche.

The listing gives investors exposure to Egyptian consumer finance, microfinance, small-business lending and payments, while the group’s overseas businesses remain outside the listed entity. Although proceeds from the secondary sale go to the parent, it plans a separate capital injection of up to EGP 4 billion ($76.5 million) into the Egyptian business. CIB’s commitment brings a longstanding banking partner into its shareholder base, with broader investor demand still to be established through the offering.

8. UAE pilots test domestic and cross-border tokenised deposit transfers

Ant International announced on 6 October that it had completed treasury pilot transactions using HSBC’s Tokenised Deposit Service through Ant’s WhaleRTP treasury platform. These included domestic UAE dirham transfers and cross-border US dollar transfers from the UAE to Hong Kong and Singapore. The pilots connect Ant’s corporate treasury workflow to HSBC’s network. HSBC launched its UAE service on 22 June, offering eligible clients round-the-clock domestic and cross-border transfers.

In a separate development, Mashreq announced on 30 September that it had completed a live cross-border transaction with Citi using bank-issued tokenised deposits, as part of the pilot programme for Swift’s blockchain ledger. This transaction tests connectivity between banks through shared infrastructure, whereas the HSBC–Ant pilots use HSBC’s own service.

9. UAE and Egypt renew AED 5 billion local-currency swap

The Central Bank of the United Arab Emirates and Central Bank of Egypt renewed their bilateral currency-swap agreement on 29 September for five years. The facility retains its AED 5 billion ($1.36 billion) nominal value, with an agreed Egyptian-pound equivalent of EGP 69 billion ($1.32 billion at the 1 October exchange rate).

First signed in September 2023, the agreement enables the two central banks to exchange local currencies to support bilateral trade, investment and settlements. The renewal raises the agreed Egyptian-pound amount from EGP 42 billion to EGP 69 billion ($1.32 billion at the 1 October exchange rate), while leaving the dirham limit at AED 5 billion ($1.36 billion).

10. Egypt launches EGP 1 billion fund to restructure distressed factories

The Central Bank of Egypt and Ministry of Industry launched the Distressed Factories Restructuring Fund on 1 October with EGP 1 billion ($19.1 million) in capital. Participating banks include National Bank of Egypt, Banque Misr, Arab African International Bank, Agricultural Bank of Egypt and Export Development Bank of Egypt, while CI Capital will manage the fund.

The Central Bank of Egypt announced debt relief for distressed businesses and factories in December 2019. The new fund combines equity investment, loan restructuring and operational improvements, targeting industrial companies with promising operating fundamentals. Its launch comes as the IMF expects higher input and financing costs to weigh on manufacturing growth in FY2026/27.

What to watch

The EU-GCC Summit in Saudi Arabia (24 October), the Saudi Central Bank’s September banking and monetary statistics release (29 October), and the Central Bank of Egypt Monetary Policy Committee meeting (29 October).