Bangko Sentral sees limited fallout from Ukraine crisis

Benjamin Diokno

The direct impression of the Russia-Ukraine warfare on the Philippines is “inconsequential,” representing lower than 1 p.c of merchandise commerce and banks’ monetary publicity, however the battle would possibly make a dent on inbound remittances, the Bangko Sentral ng Pilipinas (BSP) chief mentioned.

BSP Governor Benjamin Diokno on Monday advised reporters the Philippines has limited financial and enterprise hyperlinks with both of the international locations at warfare.

Apart from, each Russia and Ukraine are very far from the Philippines which, in flip, is having fun with robust macroeconomic fundamentals, he famous.

By way of cross-border monetary publicity of Philippine banks to Russia and Ukraine, these had been estimated at lower than $1 million {dollars} every—$672,200 and $960,200 when it comes to deposit liabilities, respectively, as of the tip of September 2021.

“The sum [of these liabilities] is less than 1 percent of the [Philippine] banking system’s total deposit liabilities as of the same period,” Diokno mentioned, including that Philippine banks don’t have any cross-border monetary belongings in both Russia or Ukraine.

Nonetheless, two Philippine banks have investments in two Russian banks—the VTB Financial institution Public Joint Inventory Co. and the Russian Agricultural Financial institution —amounting to P254.12 million as of December 2021. That is lower than one p.c of the full belongings beneath administration of those banks.

Meager commerce flows

By way of commerce, the nation generated $120 million in export receipts from Russia and $5 million from Ukraine in 2021. Mixed, these represented nearly 0.2 p.c of whole exports final yr.

“In brief, trade financing transactions of banks with Russian counterparts are inconsequential,” Diokno mentioned.

However when it comes to inbound person-to-person remittances, the BSP is conscious of dangers that the warfare might not directly have an effect on inflows, even when lower than one p.c of cash transfers in 2021 had come from Russia and Ukraine.

Final yr, private remittances from abroad Filipinos reached a record-high $34.9 billion. That is anticipated to develop by 4 p.c this yr and subsequent yr.

Maybank mentioned in a March commentary that Southeast Asian nations just like the Philippines had been weak to developments within the European Union, which can fall into recession beneath a chronic warfare attributable to their dependence on vitality imports from Russia.

Maybank famous that Europe relied on Russia for a couple of quarter of its crude oil and 40 p.c of pure gasoline.

The European international locations which are seen most reliant on Russian gasoline are Hungary, Czech Republic, Latvia, Slovakia, Italy and Germany.

Russia accounts for simply 0.04 p.c of whole international direct funding inflows, or $314 million, to Affiliation of Southeast Asian Nations (Asean) between 2016 and 2020, Maybank mentioned.

“But a broader European downturn will impact Asean exports and FDI,” it added. INQ

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