NextGen Day

MANILA, Philippines – The Ukraine-Russia conflict is unlikely to have a significant impact on remittances to the Philippines, but it would be a different story if the conflict involved any countries of the North Atlantic Treaty Organization (NATO).

Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas (BSP) said in a virtual briefing on Friday that remittance inflows from Ukraine in 2020 were USD120,000, or about 0.0004% of overall inflows, while inflows from Russia totaled USD2.3 million, or about 0.007%.

“However, if the battle escalates further and includes NATO members, this might have serious implications for the Philippines,” he warned.

The United States and the European Union are both members of NATO, according to Diokno, and are two of the Philippines’ biggest commercial partners.

“The BSP will continue to closely watch new external sector trends and risks, as well as how they may affect the BSP’s forecast, particularly that of overseas Filipino remittances,” he said.

Remittances are expected to climb by 4% this year, according to the Philippine central bank.

In light of recent events, Diokno stated that OFW remittances have demonstrated their tenacity in the face of previous crises.

He claimed that in 2021, it reached a new high of USD34.1 billion, up 5.1 percent year on year.

For decades, remittances have been one of the most important drivers of the domestic economy because they help with gasoline consumption.

“These inflows provided much-needed FX (foreign exchange) resources, allowing the economy to satisfy its needs even while external demand was slowed by the global health crisis,” he noted.

In the midst of rising external sector concerns, Diokno stated having enough foreign exchange “ensures a good balance of payments position and an acceptable level of GIR (gross international reserves).”

In 2021, remittances accounted for roughly 36% of goods and services exports and about 29% of the country’s GIR, according to him.

Diokno also stated that the ongoing pandemic, as well as a number of external issues, pose a threat to the country’s remittance growth.

“Yet, there are more reasons to support the notion that offshore Filipino remittances would continue to expand in the short future,” Diokno added, encouraging OFWs and their families to save and invest their money.

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