Bank lending to developing countries in 1996 is expected to fall by nearly a third to $64 billion, according to a report released Thursday by the Institute for International Finance.
Most of the drop will occur in short-term financing, the group said. Brazil alone is expected to demand only $5 billion in short-term foreign bank loans this year, down from $12 billion in 1995. Also, Thailand is expected to need only $28 billion in short-term foreign bank loans, down from $35 billion last year.
While developing countries are requesting fewer short-term loans, their appetite for medium-term financing remains strong. The institute estimated banks will make $25 billion in medium-term loans to developing countries in 1996.
The institute predicted demand for foreign bank loans will fall even further in 1997 to just under $60 billion. Most of the drop will occur in short-term financing. The report comes out just 10 days before finance ministers and central bankers from around the world are scheduled to meet in Washington for the annual World Bank-International Monetary Fund conference.