A small increase in lending by commercial banks to Middle East states in the first half of 1995 was offset by a strong rise in official deposits. Total lending to Middle East states by banks reporting to the Bank for International Settlements (BIS) rose 1 per cent in the six months to June 1995 to $80,491 million, compared with a 10 per cent increase in official deposits to $214,222 million.

Most of the rise in official deposits was reported by oil producers in the Gulf reflecting higher oil prices in the first half of 1995. Deposits by Saudi Arabia rose 17 per cent to $66,365 million, while borrowing by the kingdom fell by 6 per cent to $15,259 million. Iran’s position also improved as reserves with the commercial banks rose 25 per cent to $8,057 million, although Iran’s borrowing rose 15 per cent to $11,579 million.

Oman, Bahrain and Qatar all increased their deposits with commercial banks, but the rise was outstripped by an increase in borrowing by the three states.

Outside the Gulf, Egypt’s deposits with commercial banks have reached almost $30,000 million, while official borrowing is just over $3,000 million. Jordan’s position has also improved, mainly due to a 6 per cent reduction in borrowing to $1,277 million. Pakistan’s position with commercial banks deteriorated during the period. The countries reserves, held by BIS reporting banks, rose 6 per cent to $5,990 million, but commercial borrowing by the country rose by 30 per cent to $4,879 million.