MANILA: The direct impact of the Russia-Ukraine war on the Philippines is “inconsequential,” representing less than 1% of merchandise trade and banks’ financial exposure, but the conflict might make a dent on inbound remittances, according to the Bangko Sentral ng Pilipinas (BSP) chief.

       BSP governor Benjamin Diokno told reporters that the Philippines has limited economic and business links with either of the countries at war.

       Besides, both Russia and Ukraine are very far from the Philippines which, in turn, is enjoying strong macroeconomic fundamentals, he noted.

       In terms of cross-border financial exposure of Philippine banks to Russia and Ukraine, these were estimated at less than US$1mil (RM4.2mil) each – US$672,200 (RM2.66mil) and US$960,200 (RM4.07mil) in terms of deposit liabilities, respectively, as of the end of September 2021.

       “The sum (of these liabilities) is less than 1% of the banking system’s total deposit liabilities as of the same period,” Diokno said, adding that banks have no cross-border financial assets in either Russia or Ukraine.However, two Philippine banks have investments in two Russian banks – the VTB Bank Public Joint Stock Co and the Russian Agricultural Bank – amounting to 254.12 million pesos (RM20.66mil) as of December 2021.

       This is less than 1% of the total assets under management of these banks.

       In terms of trade, the country generated US$120mil (RM509mil) in export receipts from Russia and US$5mil (RM21mil) from Ukraine in 2021.

       Combined, these represented just about 0.2% of total exports last year.

       “In brief, trade financing transactions of banks with Russian counterparts are inconsequential,” Diokno said. — Philippine Daily Inquirer/ANN