Financial pressure on Middle East oil exporting economies led to a significant decline in their deposits with Western banks in the first quarter of 1994, the Bank for International Settlements (BIS) reports.

Claims by Western banks on Middle East institutions rose by $3,400 million during the same period. This was mainly due to changes in accounting rules which affected some banks’ guaranteed exposure, the Basle-based BIS says in its latest issue of International Banking & Financial Market Developments.

When adjusted to include exchange rate movements, Middle East deposits fell by $3,915 million in January-March 1994, the BIS says. Saudi Arabia accounted for $2,325 million of the decline. The principal exception was Libya, whose deposits rose by $816 million following large withdrawals in previous years.

According to the BIS: ‘Another salient feature was the build-up of deposits by Egypt and Israel, where various forms of capital inflows allowed these countries to strengthen further their net creditor position with reporting banks.’

Turkey’s economic problems were reflected in a $1,599 million fall in its deposits with reporting banks. Claims on Turkey declined by $1,200 million, as earlier inflows of interbank funds were reversed.