The rate of growth of debt owed by Middle Eastern and North African states (including Turkey and Pakistan) slowed to 4.3 per cent in 1994 from 7 per cent the year before, according to the latest edition of the World Bank’s World Debt Tables.
The region’s total debt in 1994 was $269,968 million compared to $258,828 million in 1993. The World Bank revised the latter figure downwards from the previously published total to reflect the reduction in Egypt’s debt under its retroactive restructuring programme.
Preliminary figures for 1995 indicate that the rate at which Middle East debt is growing may have slowed even further: the World Bank estimates that the total debt of the Arab states (excluding Sudan) and Iran grew at a rate of 4 per cent last year compared to 7 per cent in 1994 (MEED 22:3:96). An encouraging sign, the Bank says, is that countries like Lebanon, Tunisia and Saudi Arabia are now attracting more private capital in a region where flows of funds were dominated in the past by official lending and aid. But the region’s debt to export ratio worsened in 1994 to 29.4 per cent, compared to 19.1 per cent the year before.
Egypt is still the largest Arab debtor with debts of $33,358 million in 1994 compared to $31,109 million in 1993. These figures are adjusted to reflect the substantial impact of Egypt’s IME-assisted debt forgiveness programme – last year’s World Bank figure for Egyptian debt in 1993 was $40,626 million. Egypt’s debt service burden in 1994 was relatively light at $2,279 million, giving it a debt service to export ratio of 14.6 per cent, well below the regional average. But 1995 estimates see the ratio rising to 19 per cent, though with little increase in Egypt’s external debts.
Algeria was in a less comfortable position in 1994 with total debt 15 per cent higher at $29,898 million. But reschedulings, largely of commercial debt, cut Algeria’s debt service obligations to $5,364 million in 1994 from $9168 million. Its debt service to export ratio shrank markedly during the year, but was still far higher than the regional average at 55.3 per cent. The World Bank estimated that the ratio fell further in 1995, to 42.5 per cent.
Iran, after nearly a decade of going steadily deeper into the red, managed to shrink its total debt by just under 3 percent to $22,712 million. Iran forged a series of rescheduling deals with foreign creditors covering about half its total debt stock, and faced a rise in debt servicing to $4,314 million from $1,796 million.
Turkey, still by far the region’s biggest debtor, shrank its debt to $66,332 million from $68,800 million. Around 27 per cent of the latter was short-term debt, reflecting a borrowing spree in 1993 fuelled by overconfidence about the lira’s strength. By 1994 the portion of short-term debt had fallen to 17.1 percent of the total.
Syria added around $500 million to its debt in 1994, taking the total to $20,557 million. About half of the increase was arrears on existing debt. Syria’s debt service rose to $398 million in 1994 from $283 million, giving it one of the region’s lowest debt service to export ratios at 5.3 per cent.
Sudan’s service payments on its 1994 debt of $17,710 million dwindled to $1 million from $120 million in 1993. Sudan came close to expulsion from the IMF in 1994 because of debt arrears.
Pakistan’s total debt grew by 13 per cent to $29,579 million, with the proportion of short-term debt slightly lower at 16.4 per cent. It’s debt service to export ratio increased to 34.8 per cent from 25.2 per cent.
Morocco’s debt rose $1,250 million to $22,512 million, with 1994 debt service payments of $2,920 million. Lebanon, Jordan and Tunisia all saw slight increases in total indebtedness.