Ukraine-Russia conflict alone has little impact on PH remittances

MANILA – The Ukraine-Russia conflict is not expected to put a big dent on remittances to the Philippines, but it is another story if the war would include some members of the North Atlantic Treaty Organization (NATO).

In a virtual briefing on Friday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said remittance inflows from Ukraine in 2020 amounted to USD120,000 or about 0.0004 percent of the total, while inflows from Russia reached USD2.3 million or about 0.007 percent.

“However, should the war escalate further and include NATO-member countries, this could have significant implication(s) for the Philippines,” he said.

Diokno said the United States and European Union are part of NATO and are two of the Philippines’ major trading partners.

“The BSP will continue to monitor closely emerging external sector developments and risks and how this may impact on the BSP’s forecast, including that of overseas Filipino remittances,” he added.

Philippine monetary authorities forecast a 4-percent growth for remittances this year.

Amidst the latest developments, Diokno said OFW remittances have proven its resilience despite several crises in the past.

He said it even posted a new record-high level of USD34.1 billion in 2021, up 5.1 percent year-on-year.

Remittances have been among the major drivers of the domestic economy for several decades now since it helps fuel consumption.

“These inflows generated much needed FX (foreign exchange) resources that helped meet the requirements of the economy even as external demand was weighed down by the global health crisis,” he added.

Diokno said having enough foreign exchange “ensures a healthy balance of payments position and an adequate level of GIR (gross international reserves) in the face of mounting challenges to the external sector.”

He said remittances accounted for around 36 percent of exports of goods and services, and about 29 percent of the country’s GIR in 2021.

Diokno further said the ongoing pandemic, along with several external factors, are a risk to the expansion of remittances to the country.

“Yet, there are stronger reasons to support the view that inflows of overseas Filipino remittances in the near term will continue to grow,” Diokno said, as he encouraged OFWs and their families to put their funds in savings and investments.