BSP says Russia-Ukraine conflict's impact on economy, banking system 'limited'

ABS-CBN News

Posted at Apr 11 2022 10:49 AM

A woman walks in front of an electronic panel displaying the dollar sign at an exchange office in Moscow, Russia, March 10, 2022. Maxim Shipenkov, EPA-EFE/File
A woman walks in front of an electronic panel displaying the dollar sign at an exchange office in Moscow, Russia, March 10, 2022. Maxim Shipenkov, EPA-EFE/File


MANILA - The Bangko Sentral ng Pilipinas on Monday said the impact of Russia's invasion of Ukraine on the Philippine economy and its banking system is "limited."

This is due to the country's distance from the conflict area, the limited economic link with both Russia and Ukraine, and the Philippines' strong macroeconomic fundamentals, the BSP said in a statement.

Russia ordered a military operation to take over Kyiv and other neighboring cities in February. The conflict has affected the global oil supply chain which resulted in higher world crude oil prices as well as inflation for other commodities. 

Export links to both Russia and Ukraine are "negligible" at $120 million and $5 million, respectively, the central bank said. Russia's trade link was just 0.2 percent of the country's total export in 2021, it added.

The BSP said "trade financing transactions of banks with Russian counterparts are inconsequential." 

Philippine banks also have "minimal" cross-border deposit liabilities exposure to both Russia and Ukraine, the BSP said.

Meanwhile, two local banks have total investments of P254.12 million, through their Trust Departments in two Russian banks, namely, the VTB Bank Public Joint Stock Company and the Russian Agricultural Bank, as of December 2021, the BSP said.

But this represents less than 1 percent of their total assets under management, it added. 

In terms of remittances, less than 1 percent of the country's total overseas Filipino (OF) remittance for 2021 was from Russia and Ukraine.

BSP Governor Benjamin Diokno earlier said inflation could remain elevated for the year partly due to the conflict.

The BSP earlier revised inflation targets for 2022 and 2023 to 4.3 percent and 3.6 percent, respectively, from 3.7 percent and 3.3 percent.

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