Oil States short of ready cash

Press, Volume CXV, Issue 33803, 27 March 1975, Page 19

Oil States short of ready cash

(N.Z.P A.-Reuter—Copyright)

LONDON. March 26.

Several Middle East oil-exporting countries are running short of ready cash, according to London banking sources, who say that, some of the smaller Gulf States have even sought bridging loans on ; the international capital market to pay for their ambitious development programmes.

Their problem is that a fall- : ing demand for oil, and the ' need to extend customer , credit for up to 90 days in , some cases to avoid further production cut-backs, has thrown budgets out of bal- ! ance. , ! Oil States are cashing part < of the short-term certificates I of deposit on the international; capital market into which [ ■ thev channelled vast sums oft jsurplus oil revenues after the! five-fold increase in prices. Bankers said that thev had; iexnected the oil-producers to; 'renew’ almost all these certifiicat»s as thev matured. ; The sources name Iran, II Kuwait and Abu Dhabi as betting among the oil-producing I countries who are now drawsi ing on a surprisingly high .(proportion of their short-term

investments — deposits of up to one year. One banker commented: “Some oil States appear in a technically-overspent position. This means that the oil wealth is still there, but much of it is tied up in investments which cannot be realised quicklv enough to meet the exporters’ growing need for funds.” The oil-exnorting countries i (find that inflation has made! their bills, particularly for in-! idustrial goods, much higher! 'than thev expected a vear! ago At the recent Organisation of Petroleum Exnorting Countries summit conference in Algiers, the Shah of Iran said he estimated that the cost of industrial imports to the oil-exporting countries had gone up by as much as 35 per cent in the past year.