In a departure from the fiscal restraint more typically counselled by the Washington-based institution, the IMF advised that more money should be pumped into infrastructure and human resources. ‘Policymakers in the region have so far acted as though the oil price rise is largely temporary,’ said the report.

‘Most oil exporters continue to budget cautiously, apparently assuming that oil prices will decline. These countries are saving, on average, two-thirds of the higher oil revenues earned since 2002, and their high savings are showing up in the widening of global imbalances Oil producers should seize the opportunity to increase investment in infrastructure and human capital.’

The report also expressed concerns about asset price inflation, especially in the Gulf, and about the possible impact on the banking sector. ‘Authorities in some countries may need to tighten supervision to limit banks’ exposure to asset markets and promote adequate investor education,’ it said.

The region’s governments were encouraged to continue with privatisation programmes, but to refrain from underpricing the initial public offerings (IPOs) as has been the norm so far through which state companies are being sold.

Nominal gross domestic product (GDP) growth is forecast to remain strong throughout the Middle East & North Africa (MENA) in 2006. Average growth across the region is estimated at 14.9 per cent and in the GCC at 13.9 per cent.