PHL ‘Minimum’ – Impact of war on BSP

Ukrainian expatriates and Filipinos staged a small protest outside a mall in the town of Makati on February 28 against Russian aggression in Ukraine. – Philippine Star / Michael Varkas

The central bank on Monday said that the Philippine banks have a “minimum” of Russia and Ukraine exposure, as The battle continued for the seventh week.

Banco Central NG Pilipinas (BSP) Governor Benjamin E. Diokno says Philippine banks’ cross-border deposit liabilities to Russia and Ukraine are less than 1% of the total deposit liabilities in the banking industry as of the end of September last year.

“Philippine banks with Russia and Ukraine have minimal cross-border financial exposure. As of the end of September 2021, Philippine banks have liability for cross-border deposits with Russia and Ukraine amounting to $ 672,200 and $ 969,200, respectively, “he told reporters in a Viber message on Sunday evening.

Local lenders have no cross-border financial resources with Ukraine And in Russia, the BSP chief added.

Mr Diokno said the two Philippine banks had investments of 254.12 million P254.12 million, through their trust divisions, two Russian banks – VTB Bank Public Joint Stock Co. and Russian Agricultural Bank – until December 2021.

“It represents less than 1% of the total assets under management (of two Philippine banks),” he said.

Mr Diokno added that the flow from both Russia and Ukraine was less than 1% of the total. Cash remittances last year.

“Nevertheless, the BSP is aware that this crisis could indirectly affect the flow of remittances to foreign Filipinos. The country, “said Mr Diokno.

According to the central bank, the amount of cash remittances from Russia and Ukraine in 2021 was $ 2.261 million and $ 121,000, respectively. Both are relatively small compared to the $ 3.745 billion in Innflows that come from Europe and total থেকে 31.417-billion from around the world in the same year.

The BSP chief also noted that the country’s direct trade links with Russia and Ukraine were “negligible”. In 2021, exports to Russia amounted to $ 120 million, or 0.2% of the total exports to the Philippines, while exports to Ukraine reached $ 5 million.

“In short, the commercial financing of banks with their Russian counterparts is inconsistent,” said Mr Diokno.

He reiterated that the country would continue to see limited economic collapse from Russia’s invasion of Ukraine.

Russia-Ukraine economic collapse in the Philippine economy is limited by three reasons: first, the country’s geographical distance from the conflict zone; Second, the country’s limited economic and trade ties with both Russia and Ukraine; And third, its strong macroeconomic fundamentals, “said Mr Diokno.

Reuters reported on Saturday that S&P downgraded Russia’s foreign exchange rating to “selected default” for increased risk that Moscow would not be able to and is willing to honor its commitment to foreign borrowers.

Russia is facing further sanctions on the Western economy due to its aggression in Ukraine.

The BSP had previously acknowledged that the effects of the war would be felt in the Philippine economy, mainly through growthflation

At its March 24 meeting, the BSP raised its inflation forecast for 2022 to 4.3%, well above the 2-4% target already.

In March, headline inflation rose sharply from 3% in February to 4%, which already reflects the effects of the Russia-Ukraine war on global oil prices and commodity prices.

There are global concerns about potential fuel disruptions due to the crisis. Russia is one of the world’s major oil exporters, while Ukraine is a major global wheat exporter. – LWTNoble With Reuters

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