Lending by commercial banks to Middle East countries was almost unchanged during 1994, although the proportion of short-term debts fell, according to a report issued by the Basle-based Bank for International Settlements. Short-term lending, which is defined in the report as loans with a maturity of up to and including one year, fell to below 50 per cent of the total, down from almost 60 per cent in 1993.

'A cautious attitude on the part of banks in the face of weak fiscal positions and fragility in domestic financial systems dampened lending activity with Middle Eastern, mostly oil producing, countries,' the report said.

Iran showed the sharpest drop in short- term loans as a proportion of total commercial lending, which the report attributed to bilateral debt re-negotiations with individual creditor banks. Short-term lending dropped to 43 per cent of total commercial debt worth $9,842 million in 1994, compared to 76 per cent a year earlier. 'However, in view of the country's high debt levels on other accounts, this proved insufficient to prevent the currency crisis which developed at the beginning of 1995,' the report notes.

'Elsewhere, there was a shortening of countries' debt profiles, most notably in Saudi Arabia,' the report says. Commercial debt to the kingdom fell slightly in 1994 to $10,769 million, but the value of short- term debt rose more than 10 percentage points to make up 82 per cent of commercial debt.

The UAE reported a higher proportion of short-term lending than Saudi Arabia, accounting for 87 per cent of commercial debt worth $3,419 million in 1994. Qatar was the only GCC state to show a sharp drop in short-term lending, which made up 55 per cent of commercial debt last year, compared with 70 per cent in 1993.

Commercial lending to Egypt fell 8 per cent last year to $3,194 million, but the proportion of short-term lending rose 8 percentage points to 66 per cent. Jordan's commercial debt also decreased, falling 16 per cent to $1,081 million. However, short-term borrowing by the kingdom held steady at about 60 per cent of the total.

Pakistan and Yemen reported the largest rise in commercial lending during 1994, reporting increases of 20 per cent and 41 per cent, respectively. In Pakistan, short-term lending accounted for 63 per cent of total commercial debt worth $3,145 million. Short-term lending to Yemen dropped as a proportion of total debts worth $360 million to 66 per cent.