This engagement note provides a snapshotof financial development in the countries of theGulfCooperation Council (GCC), Bahrain, Kuwait, Oman, Qatar,Saudi Arabia and the United Arab Emirates (UAE), andidentifies key areas of the financial sector reform agendawhere the World Bank Group (WBG) through the FinanceMarkets Global Practice (FMGP) can provide its support, inparticular through the provision of analytical services andadvisory (ASA). A key challenge for GCC countries is todiversify their economic structures, increase the role ofthe private sector, improve the efficiency of the governmentand reform the educational system and the labor market. Thisis essential to create employment opportunities for a youngand growing domestic population. In this context, thedevelopment of an efficient, stable and inclusive financialsector is a policy objective in itself and a necessaryconduit to a more diversified and productive economicsystem. Against this backdrop, this engagement note suggeststhat improving the quality of financial intermediation inGCC economies is a balancing act between enhancing accessand preserving stability. Accordingly, it detects anddiscusses several areas of engagement for WBG which areconsistent with the financial sector reform agenda of theregion. In particular, based on the expertise and deliverycapacity of WBG, particularly of FMGP, this engagement notesuggests that WBG target ASA in the following areas: (i)financial infrastructure, particularly insolvency regimes,creditor rights and payment and settlement systems; (ii)banking competition; (iii) government debt capital marketdevelopment, including sukuk; (iv) credit guarantee schemesfor SMEs; and (v) macro prudential supervision.
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