DUBAI, Aug 4: Gulf Arab governments and private investors are likely to buy over $360 billion of foreign assets in 2005 and 2006, financed by record oil revenues, according to a report by the Institute of International Finance (IIF). The figure is more than the region’s total foreign asset purchases for the previous five years, said the report, seen on Thursday. The IIF estimates the six Gulf Arab states bought $240 billion of foreign assets between 2000 and 2004.

The (Gulf Arab region) is in the midst of a period of exceptional economic performance, said Charles Dallara, managing director of the IIF, a US-based association of financial institutions. Gulf states Kuwait, Qatar, Saudi Arabia and the United Arab Emirates are OPEC members, while the remaining two — Oman and Bahrain — are non-OPEC oil and gas producers.

The IIF said economists had to use current account data to estimate the region’s foreign assets because only Bahrain — the smallest Gulf state — publishes those figures. Its foreign assets stood at $90.2 billion at the end of 2003. No data on the destination of this capital is available, said the IIF. “We estimate that the bulk is held in diversified portfolios of foreign holdings, with US dollar denominated assets accounting for the largest share.

The IIF said there was growing anecdotal evidence that Gulf Arab governments and private investors were investing more funds within the region. It said the region’s buoyant real estate and stock markets had added weight to this argument. The combined capitalisation of the Gulf stock markets surged more than four-fold between the end of 2002 and July 2005, to $830 billion.

The IIF forecast Gulf oil revenue would increase 49 per cent to $291 billion in 2005, compared to an annual average of below $100 billion in the 10 years to 2003. It forecast Brent crude oil at $54 per barrel this year and $55 in 2006, up from $38 in 2004.—Reuters