BIS says short-term debt on the rise

29 July 1994

There has been a rise in short-term borrowing by some of the Middle East's largest economies, according to data published by the Basle-based Bank for International Settlements (BIS). The proportion of short-term lending by Western banks rose to 66 per cent of the total of $47,000 million consolidated cross-border claims on Middle Eastern economies at the end of 1993, the BIS says.

'Iran stands out as a major exception to the shortening of the debt profile, as some refinancing deals with creditor banks allowed the country to ease temporarily its debt servicing difficulties,' the BIS noted. By the end of 1993, the proportion of up-to-one-year debt - the BIS' definition of short-term lending - had fallen to 75 per cent, from 85.4 per cent at end-1992.

However, Iran's debt profile remains the most short-term of any major country outside the BIS area, with the exception of Taiwan, whose debt profile reflects its role as a banking centre. Iran's debt to BIS banks stood at $8,709 million at the end of 1993, of which $6,547 million was short-term.

Algeria and other North African debtors are included in the BIS' Africa group. Algeria managed to reduce the proportion of short-term debt in the second half of 1993, but remained the country most indebted to banks, and accounted for 65.6 per cent of its $14,093 million debt reported by the BIS.

The BIS data also show that banks based in the EU have consolidated their position as the largest lenders to the Middle East and Africa. Provisionally, 52 per cent of all lending to the Middle East and 70 per cent to Africa came from EU banks. For the Middle East, the EU share was 47 per cent at the end of 1992, 47 per cent at end-1990 and 41 per cent at end-1985.

US banks' share rose to 11.6 per cent at end-1993, up from 8.7 per cent at end-1992 and 7.4 per cent in 1990. This is still well below the 19.8 per cent of international bank lending which came from US banks in 1985.

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