The Gulf states' external and fiscal surpluses may decline this year due to a fall in oil prices, an International Monetary Fund report said yesterday.

"The region's external and fiscal surpluses remain very high, but are expected to decline in 2007. For oil exporters, only one-fourth of the projected fall in the external current account surplus in 2007 is due to lower oil prices," Mohsin S. Khan, director of the IMF's Middle East and Central Asia Department, said.

Oil export revenues are projected to decline to $570 billion in 2007, based on an average oil price of $61 a barrel, down from $64 last year.

"Naturally, the revenue projections are highly sensitive to oil prices, with a $5 a barrel decline estimated to reduce the region's annual exports by $45 billion, and fiscal receipts by $35 billion," he said.

Although the region is set for another high-growth year, this may not necessarily be very good news to consumers as soaring inflation and the declining value of local currencies, still pegged to the US dollar, are going to nullify the gains.

A supply of 40,000 housing units could reduce pressure on soaring house rents in places such as Dubai and Sharjah, however that may not be enough to contain the near-vertical hike in house rents, the official said.

"A supply of 40,000 housing units could help reduce pressure on rents, but may not be enough," he said.

The International Monetary Fund yesterday released its May 2007 Regional Economic Outlook: Middle East and Central Asia.