Digital Solutions Guidelines for Public Financial Management
Author:
Lorena Rivero del Paso
Search for other papers by Lorena Rivero del Paso in
Current site
Google Scholar Close
,
Sailendra Pattanayak
Search for other papers by Sailendra Pattanayak in
Current site
Google Scholar Close
,
Gerardo Uña https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by Gerardo Uña in
Current site
Google Scholar Close
, and
Hervé Tourpe https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by Hervé Tourpe in
Current site
Google Scholar Close
Publication Date:
06 Oct 2023
eISBN:
9798400251566
Language:
English
Keywords:
PFM function; PFM IT system; PFM process; PFM IT project; PFM business process
Download PDF (2.8 MB)

The Digital Solutions Guidelines for Public Financial Management (Guidelines) are intended to serve as a comprehensive reference material for the assessment, design, and improvement of digital initiatives in the public financial management (PFM) area. To support the digital transformation of PFM functions, the Guidelines are structured around three Pillars – Functional, IT Architectural, and Governance and Management. Each pillar comprises six principles, which are further broken down into one to four attributes to promote more efficient and transparent PFM operations while fostering innovation and managing digital risks. These Guidelines also allow a graduated approach to digital transformation of PFM through three levels of maturity for each Attribute – foundational, intermediate, and advanced – to help take into account country-specific contexts and capacities in digital transformation strategies.

Abstract

The Digital Solutions Guidelines for Public Financial Management (Guidelines) are intended to serve as a comprehensive reference material for the assessment, design, and improvement of digital initiatives in the public financial management (PFM) area. To support the digital transformation of PFM functions, the Guidelines are structured around three Pillars – Functional, IT Architectural, and Governance and Management. Each pillar comprises six principles, which are further broken down into one to four attributes to promote more efficient and transparent PFM operations while fostering innovation and managing digital risks. These Guidelines also allow a graduated approach to digital transformation of PFM through three levels of maturity for each Attribute – foundational, intermediate, and advanced – to help take into account country-specific contexts and capacities in digital transformation strategies.

I. Introduction1

Digital transformation of public financial management (PFM) can bring significant benefits to governments. First, it can enhance fiscal operations and ensure optimal use of public funds through process automation, which can reduce manual errors and increase the efficiency of financial transactions. It can also support budget planning and resource allocation as well as strengthen expenditure control and monitoring. In addition, digital solutions enable better monitoring and analysis of critical macro-fiscal policy objectives— such as revenue generation, expenditure patterns, cash flows, and debt levels—by providing real-time and accurate financial data, which can also promote fiscal transparency, budget credibility, and accountability. Digital solutions can also facilitate timely and comprehensive identification, assessment, and mitigation of fiscal risks including contingent liabilities, enhancing the government’s ability to manage and respond to fiscal vulnerabilities effectively. All this, in turn, assists policymakers in making informed decisions in a timely manner on key fiscal and PFM issues.

Governments have been using financial management information systems (FMISs) as the main digital solution to support their PFM functions. FMISs can be defined as a set of digital solutions to automate PFM processes including budget formulation, execution, accounting and reporting, as well as the custodianship and reporting of revenues (World Bank 2023). At their core, these systems provide a complete record of a government’s financial events and transactions. They serve to generate and report fiscal data in a timely, relevant, and reliable manner, supporting decision making and control, and enabling accountability. When an FMIS integrates or interoperates with other government information technology (IT) systems that provide extended PFM functions—such as payroll, debt management, and e-procurement—it is generally known as an integrated FMIS.

The evolution of FMIS and its adoption by the ministries of finance can be traced back to the early 1960s, when the use of mainframe computers became increasingly common, and governments began to recognize their potential to automate financial processes. The first FMISs were standalone systems, used primarily by finance and accounting departments to track expenditure, manage accounts payable and receivable, and generate financial statements. In the 1980s and 1990s, the use of personal computers and local area networks became widespread, leading to the development of more comprehensive FMISs that could automate complex financial processes and were integrated with other government IT systems. Client-server architecture allowed multiple users to access the systems simultaneously, improving efficiency and data quality, and graphical user interfaces made these systems easier to use. In the late 1990s, the explosion of the internet led to the development of web-based FMISs, accessible from anywhere with an internet connection. According to the 2022 GovTech Dataset covering 198 countries, more than 190 FMISs have been launched around the world during the period 1984 to 2022 (Figure 1).

Figure 1.
Figure 1.

Launch of FMISs, 1984–2022

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: World Bank GovTech Dataset (World Bank 2022).Note: FMIS = financial management information system.

As FMIS capabilities have evolved over time (Gray 1998), they can now be sophisticated systems that integrate government budgeting, accounting, financial reporting, and core financial management functions with other government IT systems, such as procurement and payroll management systems. The 2022 GovTech Dataset shows that in more than 140 countries, these systems support more than just budget execution and treasury management and allow exchange of data with other systems (Figure 2).

Figure 2.
Figure 2.

FMIS Functional and Data Exchange Capabilities

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: World Bank GovTech Dataset (World Bank 2022).Note: FMIS = financial management information system.

However, despite large investments from governments and development partners over more than three decades, many countries still face challenges in transforming FMISs into effective tools of fiscal management. The literature provides many reasons for FMIS underperformance, including absence of a well-prepared conceptual design, lack of ownership, weak project management, inadequate definition of new functionalities, adoption of inappropriate technology, and vendor lock-in (Diamond and Kehmani 2005; Dener, Watkins, and Dorotinsky 2011; Uña, Allen, and Botton 2019). Furthermore, a recent survey of 30 countries across different regions and income groups showed that lack of interoperability, cybersecurity concerns, and evolving needs of governments remain a significant challenge for IT systems that support PFM functions (Figure 3).

Figure 3.
Figure 3.

Main Issues or Challenges Faced by PFM IT Systems in 30 Countries, by Region

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors based on surveys conducted before the workshops to pilot these Guidelines (see Annex 1).Note: IT = information technology; PFM = public financial management.

The aforementioned challenges, coupled with weak institutional and human capacity in several countries, hinder governments from reaping the full benefits of digital innovations and disruptive technologies to improve PFM. While ministry of finance officials may express interest in the adoption of new digital innovations-such as the new generative artificial intelligence (AI)-the lack of foundational elements may undermine the possibility of such adoption. Deficiencies in data governance practices can also limit the possibility of getting more value from the data already collected. Furthermore, while adopting digital innovations in PFM, governments must comprehend the multidimensional nature of digital risks, including cyberattacks and threats, digital fraud and data privacy, as well as risks arising from human errors, digital divide concerns, and reputational risks. When selecting digital solutions, it is essential to systematically consider risk mitigation measures across the three layers involved in handling data: people (for example, internal and external users of digital solutions or systems, including government staff and citizens), technology (from IT infrastructure to applications), and PFM business processes; this is also important to avoid reputational risks and financial waste (Amaglobeli and others, 2023).

Digital solutions, which refer to a much wider range of digital tools and systems than FMISs,2 can have a transformational effect on a PFM function, process, and/or output, as illustrated in Figure 4. Such an effect typically increases as adoption of digital solutions progresses through three stages: (1) simple replication of a manual process in a digital form (for example, change in which a signature on paper is no longer required and replaced by user authentication), usually known a “digitization” (2) cases in which a process is digital by default, with all of its major steps automated (for example, complete replica of a business process in which invoices are submitted online with no manual intervention), known as “digitalization” and (3) state in which a process is digital by design and thus reengineered and optimized to take advantage of available digital solutions, known as “digital transformation.”3

Figure 4.
Figure 4.

Stages of Adoption of Digital Tools and Solutions

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.

Governments have adopted digital innovations at different paces, reflecting not only barriers to digital transformation but also their specific windows of opportunity for such reform. Reengineering a process to be digital by design allows eliminating obsolete practices, taking advantage of modern technologies4 and building on the learnings of digital PFM pioneers. Countries with relatively basic infrastructure may be able to establish the foundations and leapfrog directly to digital transformation, even by using disruptive technologies.5 Reforms for digital transformation of PFM thus require careful design and adequate safeguards that are based on a clear understanding of the country’s underlying infrastructure and needs, as well as its institutional strengths and weaknesses. Governments can also tap opportunities where digital solutions can yield rapid and substantial benefits, for example, using fiscal data to improve economic predictions (Misch and others 2017) and integrating digitalization of payments with a country’s PFM system (Cangiano, Gelb, and Goodwin-Groen 2019), including fintech solutions (Uña and others 2023) for savings and a wider reach.

A country’s progress in modernizing its PFM functions and IT systems may not necessarily follow parallel tracks. It is possible, for example, to have an IT system with broad coverage but with dysfunctional PFM processes, or vice versa. Although they are likely to be correlated, it is also not guaranteed that the efficiency of PFM and level of digital adoption in a country will be aligned with the quality of its public institutions. Governments can benefit from adopting digital solutions, but lack of appropriate safeguards may also exacerbate preexisting corruption risks, particularly in countries with weak institutional capacity and poor governance. Therefore, governments should seek to make improvements in all relevant areas—efficient PFM functions, modern digital solutions, and sound governance and institutions—and approach the adoption of digital solutions in key PFM functions holistically, from the functional, technological, and governance and management perspectives. This Technical Note sets out the general framework of Digital Solutions Guidelines for Public Financial Management (hereinafter called “guidelines”) to assist governments and other relevant actors in this endeavor.6

II. Objectives and Users of the Guidelines

The Guidelines aim to facilitate digital transformation of key PFM functions by (1) providing a basis to assess existing PFM digital solutions and the associated governance and management practices, to identify strengths and weaknesses; (2) assisting with the design of digital transformation strategies; and (3) supporting the development of detailed functional requirements for introducing or updating PFM IT systems with robust building blocks that enable innovation with a purpose-oriented approach. This assess-design-improve approach to using the Guidelines (Figure 5) is further elaborated in section IV.

Figure 5.
Figure 5.

Uses of the Guidelines

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: IT = information technology.

These guidelines, which emphasize the centrality of data throughout its life cycle7 as the backbone of digital transformation of PFM, include the general framework with pillars, principles, and attributes (as discussed in this Technical Note and Manual), and are supplemented by (1) a forthcoming handbook with detailed descriptions of all principles and attributes, as well as examples on the application of the functional pillar across 11 key PFM functions (Table 1), which are further disaggregated into subfunctions based on system modules or processes8 (Annex 3); and (2) the Digital Solutions Guidelines Implementation Tool (DiGIT).9 The DiGIT, together with the handbook, aims to facilitate practical application of the guidelines, thereby supporting the development of reform roadmaps, policies, and action plans in specific country contexts.

Table 1.

PFM Functions in the Handbook of the Guidelines

article image
Source: Authors, based on Allen and others 2015. Note: Additional functions, such as public procurement and payroll, are also considered for the purpose of interoperability and automation of controls. PFM = public financial management.

Expected Audience and Users of the Guidelines

The key users of these guidelines include policymakers and senior managers at ministries of finance, such as budget, treasury, accounting, and IT directors, who could apply the general framework set out to ensure that opportunities are seized where appropriate to improve the design and outcomes of fiscal policy through digital solutions. Officials who have operational responsibility for the design and implementation of PFM processes10 will find the guidelines—including the detailed maturity tables (Annexes 3–5), the granular Functional Attributes of PFM functions included in the handbook, and the DiGIT—useful for developing a strategy and roadmap for digital transformation of PFM. The guidelines will also be useful for development partners who support progress in FMISs or seek to improve PFM processes using digital tools. The private sector, including startups and software vendors who develop or strategize digital solutions for PFM, and several civil society organizations (for example, those working in CivicTech, public finance, and open government) would also benefit from being acquainted with the guidelines (Figure 6).

Figure 6.
Figure 6.

Target Audience and Users of the Guidelines

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: PFM = public finance management.

Methodological Underpinnings of the Guidelines

The guidelines are built upon four underlying precepts—purpose orientation, user-centricity, data-centricity, and iterative approach (see Box 1).

The guidelines are informed by a combination of expert knowledge, country cases, international s tandards, and good practices in the PFM area, relevant academic literature, and an extensive consultation and piloting process; Annex 1 further describes the consultation and piloting process.11 This helped consider different perspectives, define the scope and approach, obtain feedback, and test the use of the guidelines to make them applicable to economies in different regions and in different stages of digital development.

Underlying Precepts of the Guidelines

  • 1. Purpose orientation: By focusing on the different public financial management (PFM) functions, they seek to emphasize the importance of a purpose-oriented digital reform. Recognizing that technology evolves, and different solutions can be adopted to support specific PFM processes, the guidelines do not endorse the adoption of specific digital solutions, technology, or applications. They do recommend core principles that PFM digital solutions should observe from a practitioner’s perspective.

  • 2. User-centricity: The development of these Guidelines has benefited from defining very early on that the target audience is practitioners and implementers of PFM digital solutions, from the policy, management, or development point of view.1 They help create a bridge of understanding between the functional and information technology areas, making digital transformation and the adoption of digital innovations more attainable.

  • 3. Data-centricity: The pillars, principles, attributes, and levels of maturity of the framework recognize data as the backbone of digital transformation of PFM. The data used for decision making will only be as good as their quality, coverage, and timeliness. Transparency and accountability are also affected by how the data are collected and made available to the public.

  • 4. Iterative approach: The framework presented in this Technical Note has already undergone several iterations, which have benefited from the consultations, pilots, and workshops. However, considering that technology and processes continue to evolve, these Guidelines could be further iterated in the future. The Guidelines could also be expanded to cover additional PFM functions, such as financial transactions with subnational governments, payroll, procurement, or external audit, among others.

Source: Authors. Note: PFM = public financial management. 1 Furthermore, the development of these guidelines has been led by the IMF’s Fiscal Affairs Department staff who have previously held positions in ministries of finance and have developed and administered different PFM systems.

The analytical approach to development of the guidelines included four main steps: (1) identification of the main PFM functions and processes supported by IT systems; (2) assessment of the requirements for these functions and processes in line with PFM diagnostic frameworks such as the IMF’s Fiscal Transparency Code and Public Investment Management Assessment, as well as Public Expenditure and Financial Accountability; (3) benchmarking against good practices to identify the main technological aspects in digital solutions, including the Organisation for Economic Co-operation and Development’s Digital Government Policy Framework (2021b); and (4) identification of high-level functional requirements for FMIS conceptual design, including work done by the World Bank (Hashim 2014; Hashim and Piatti 2016), the Inter-American Development Bank (Pimenta and Seco 2021), and others (Long and others 2023).

III. Framework and Structure of the Guidelines

The general framework of the Guidelines is built around a three-level structure (Figure 7):

  • I. At the first level, the framework provides three pillars of digital solutions. While the underlying technology, scope, and functionalities of digital solutions for PFM can vary from country to country, they are founded on three pillars: (1) functional, referring to how digital solutions are used to support, automate, or redesign a business process; (2) IT architectural, denoting the features of the underlying technology, including cybersecurity considerations; and (3) governance and management, including the legal and institutional aspects that support or deter PFM processes for being digital by design. This is a construct that also reflects the traditional “people-process-technology” principle, which drives action. The three pillars of the framework can be used differently: the functional pillar can be applied to each PFM subfunction or process; the IT architectural pillar can be applied to each system or module; and the governance and management pillar can be applied government wide across the PFM IT systems and institutions.

  • II. At the second level, each pillar comprises six principles that usefully reflect the characteristics of the digital solution for fiscal operations.

  • III. At the third level, each principle is further broken down into one to four attributes, which provide additional specifications and granularity (Figure 8). Each principle and attribute is described in Tables 2–4.

  • IV. Attributes are further described for three levels of maturity or progression, which allow assessing a system, an ecosystem of solutions, or institutional arrangements, according to each pillar (Annexes 3–5).

Figure 7.
Figure 7.

Framework for Digital Solutions in PFM

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: IT = information technology; PFM = public financial management.
Figure 8.
Figure 8.

Principles and Attributes across the Three Pillars

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: IT = information technology.
Table 2.

Functional Principles and Attributes

article image
article image
Source: Authors. Note: IT = information technology; PFM = public financial management. 1 Data architecture defines information flows in an organization and how they are controlled, including the models, policies, rules, or standards that govern which data is collected, arranged, integrated, and put to use in data systems and in organizations. 2 See Cooper and Pattanayak (2011). 3 That is, an interaction design pattern that sequences information and actions across several screens (for example, a step-by-step signup flow). The purpose is to lower the chances that users will feel overwhelmed by what they encounter. By disclosing information progressively, interaction designers reveal only the essentials and help users manage the complexity of feature-rich websites or applications (see Gracida and Rivero del Paso, 2019). 4 Global Initiative for Fiscal Transparency, Ministry of Finance, and Public Credit of Mexico 2018.
Table 3.

IT Architectural Principles and Attributes

article image
article image
Source: Authors. Note: IT = information technology; PFM = public financial management. 1 The architecture could adopt a modular, microservices, or serverless approach. A discussion about a modular approach of financial management information systems is presented in Uña, Allen, and Botton (2019). 2 Such as artificial intelligence computing, software as a service. 3 Examples include systems that natively expose their functions through an application programming interface, or adapt interfaces based on the user device (for example, a computer or smartphone). 4 Such as identification and authentication tools, information mediators, security features, consent management systems, and more. For a reference list of digital building blocks, the GovStack Initiative has compiled a list and is developing technical specifications that can be accessed in their website (GovStack n.d. b). 5 According to the Digital Public Goods Alliance, “digital public goods are open-source software, open data, open AI models, open standards, and open content that adhere to privacy and other applicable laws and best practices, do no harm by design, and help attain the Sustainable Development Goals (SDGs).” The definition encompasses (1) open software, (2) open data, (3) open artificial intelligence models; (4) open standards, and (5) open content (https://digitalpublicgoods.net/digital-public-goods/). 6 Such as internationally recognized open data standards.
Table 4.

Governance and Management Principles and Attributes

article image
article image
Source: Authors. Note: IT = information technology; PFM = public financial management. 1 In some countries, some existing core legislations were amended to allow administrative procedures to be technology-independent or to enable digital communication and electronic signatures (for example, Sweden’s Administrative Procedures Act and Austria’s General Administrative Procedures Act). Countries that have amended their access to information legislation often have introduced a more comprehensive legal basis for digitalization or digital transformation of the public sector. For example, Estonia included several provisions on administration of databases (including roles and responsibilities for controllers), rules for use (only databases created by law and prohibition of duplicate data), principles for the system (open data and metadata to be machine readable, open format), establishing the legal basis for taxonomy, and classification to ensure interoperability. Other countries have adopted these provisions within broader legislative initiatives, such as the Open Government Data Act in the United States or eGovernment Act in Austria. For PFM-related legislation, more targeted amendments to PFM laws or accounting laws (for example, machine-processable invoices mandatory in invoicing with the public sector) and archives laws (for example, principles for collecting, evaluating, archiving, preserving, accessing archival documents) may be needed. Privacy laws may also need to be amended to protect the fundamental rights and freedoms of citizens with respect to the processing of their personal data. Another current debate on legal reform on the area is whether it is more advisable to develop a technology-neutral legal environment, meaning unless necessary, no legislation regarding any technology should be adopted (for example, artificial intelligence, distributed ledger technologies, big data, cloud computing, and Internet of Things). 2 Organisation for Economic Co-operation and Development 2019. 3 Fritz, Verhoeven, and Avenia 2017. 4 For more details, see Hashim and Piatti (2018) and Open Contracting Partnership (2019). 5 Organisation for Economic Co-operation and Development 2021a. 6 While cybersecurity is addressed in the IT architectural pillar, the principle in the governance and management pillar covers the management component of it.

Levels of Maturity or Progression

To allow for a sequenced approach to development and implementation of PFM IT systems while taking country context and capacity into account, the Guidelines further disaggregate each attribute under each principle of the respective pillars into three levels of maturity or progression in the adoption of digital solutions: (1) foundational, (2) intermediate, and (3) advanced. The levels of maturity are sequential in nature, with the first level reflecting foundational or minimal elements that need to be considered in a sustainable adoption of digital solutions.12 In some cases, a country could identify elements of a more advanced level in its systems, while not fulfilling the elements of the foundational level. In such cases, the progression should consider whether the proper foundations are also in place.13

The levels of progression of the functional and IT architectural pillars can be used to assess an existing PFM IT system or module. They can also be used as blueprint for countries designing new or updated PFM digital solutions. In this case, the country could identify the required actions to adopt the advanced-level elements, avoiding piecemeal progression. In case a technical requirement has been drafted, the authorities can use the levels of progression to identify gaps and opportunities to adopt better practices.

The governance and management pillar covers the overall ecosystem of the government’s institutional arrangements. Considering that governmentwide arrangements effect the forms in which digital solutions are adopted, ministries of finance may find in this pillar some elements that are outside of their ambit. However, it is imperative to identify the systemic bottlenecks and accelerators that can be in place to reap the benefits of digital solutions in an efficient whole-of-government way.

Annexes 3 to 5 provide detailed descriptions of practices at each level—foundational, intermediate, and advanced—for all attributes, which could serve as the basis for practitioners’ use of the guidelines. The functional attributes are further detailed in the handbook to reflect specificities of the processes and outputs related to each of the PFM subfunctions covered (Annex 2). A specific example of the functional attribute on “automation of controls,” applied to the subfunction “government banking arrangements” under the “treasury management” function, is presented in Annex 6.

Relationships between Three Pillars of the Framework

The three pillars of the framework are interconnected as in the “people-process-technology” construct. Figure 9 shows this interconnection among the functional, IT architectural, and governance and management pillars and their principles. The IT architectural and governance and management pillars are shown in the background, since they are key enablers to address any of the principles described under the functional pillar. As enablers, the six IT architectural and the six governance and management principles need to be considered for the development of any PFM IT project. By strengthening each of these principles during the assessment, development, and implementation of a PFM IT system project, the principles under the functional pillar become more attainable.

Figure 9.
Figure 9.

Interrelation between the Three Pillars

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: IT = information technology.

The functional principles are shown in the center sequentially, covering different aspects of the processes for generating, storing, and publishing data along the PFM cycle. Without capturing the data, it cannot be stored, and without having structured data in a database it is not possible—or it is extremely difficult—to conduct meaningful analysis, generate fiscal reports, or disseminate the results on a website in a timely and consistent way. However, capturing data also requires not only the preconditions in the IT architectural and governance and management pillars but also support from the “data architecture and interoperability” principle of the functional pillar as well. The feedback loop allows the implementation of enhancements or upgrades to the systems. For example, Figure 9 shows interconnections between the “information transparency” and “data capture” principles. This continuous feedback loop allows users to detect gaps and implement improvements also in the underlying IT architecture supporting the system and/or the legal framework and regulations underpinning governance and management.

Some principles and attributes across all three pillars are also directly interrelated, highlighting the importance of developing digital solutions while considering all three angles. An example is “data architecture and interoperability”—a functional principle—which can be supported by a “pragmatic” system that is designed with “once-only” feature—an IT architectural principle—and a robust framework for “data governance” that enables data exchange—a governance and management principle. Similar interactions are found elsewhere, which are not always one-to-one. For example, the principle on “project management” is essential to carry out any IT project within a specific timeframe and budget. Professional project management also helps to achieve other governance and management attributes, such as having a purpose-oriented vision. As illustrated by these examples, different principles and attributes will constantly interact during the development and implementation of any PFM IT project. Figure 9 serves as a high-level representation of the main relationships.

In addition to the interactions within the framework, digital PFM projects should consider how each principle and attribute relates to the high-level architecture of a system (Table 5). Taking the functional principle on “data architecture and interoperability” again as an example, the data layer should provide a structured way to store and access data after a common model and standards, while the services layer should enable different systems to communicate and interact with each other.14 The solutions layer could further promote a unified user experience by providing a common platform for different systems. Each layer and their components can be acquired as commercial-of-the-shelf (COTS), as anything as a service,15 or can be bespoke developments, either developed in-house or outsourced.

Table 5.

High-Level Three-Tier Architecture of a System

article image
Source: Authors. Note: While the three-tier architecture is a common example in PFM IT systems, it is important to note that various other architectural models exist to suit diverse application requirements and scenarios. PFM = public financial management.

In some monolithic systems, the business rules have been programmed in the data layer, which makes managing changes in the business processes more complex.

For more information on building blocks, consult GovStack (https://www.govstack.global/).

IV. Using the Guidelines for Digital Transformation of PFM

Governments can achieve systematic and effective digital transformation of their PFM functions by using the Guidelines, based on the aforementioned “assess-design-improve” approach (Figure 5). This dynamic approach requires an iterative process through interconnected stages to facilitate continuous learning, adaptation, and improvement during the digital transformation journey. The intertwined nature of these stages ensures that the digital solutions remain effective throughout their lifecycle and accommodate new PFM requirements as a result of changing circumstances, emerging challenges, and evolving technology.

In “assess,” the first stage, it is important to keep in mind that assessing the quality of a PFM IT system or digital solution often involves quantitative and qualitative evaluation, which can be influenced by perception. Insufficient evidence and a subjective assessment may result in a suboptimal strategy, exposing technical decisions to potential influence from stakeholders with political or other vested interests. The Guidelines provide a way of analyzing specific elements of a PFM digital ecosystem or individual IT systems to identify the strengths and weaknesses and develop a reform strategy (Box 2).16 Such analysis can be done through DiGIT, a programmed spreadsheet-based implementation tool that helps understand the overall PFM digital landscape from multiple perspectives and assess the maturity of individual PFM IT systems based on the Guidelines (Box 3).17

Identifying the Strengths and Weaknesses of Public Financial Management Information Technology Systems

Generalized and top-down evaluation of systems are usually limited in their utility to plan next steps and make strategic decisions. By breaking down the analysis of systems into their specific elements and components, the guidelines allow identification of strengths, weaknesses, and next steps. The following examples highlight this for countries with different levels of digital adoption.

São Tomé and Príncipe: The review of the budget execution module, based on the draft guidelines, identified that although there are relevant challenges in using the existing system, the database structure that has linked the stages of expenditure transaction and accounting is sound and could allow additional parametrization of controls in the system to support better expenditure control.

The Philippines: In the context of an ongoing systems modernization process, the guidelines helped identify strengths and challenges, including strong aspects of current systems that should be considered in the updates. A review of digital solutions across different public financial management functions also helped identify areas where interoperability can be strengthened and options to do so.

“Design,” the next stage, entails the development of a blueprint for the implementation of the digital PFM solution based on clearly identified objectives, including reengineering of PFM processes to make them digital by design, engaging stakeholders and mapping their roles and tasks in line with the reengineered processes, and evaluating technological alternatives to develop the digital PFM solution. During design and implementation, practical challenges may arise, and feedback from stakeholders and users might reveal aspects that require improvement. These insights should inform the final stage, “improve,” including through another iteration of assessment, if needed, and provide feedback into the design phase for fine-tuning and further enhancements of the digital PFM solution.

Digital Solutions Guidelines Implementation Tool

The Digital Solutions Guidelines Implementation Tool (DiGIT) is a tool designed for practical application of these Guidelines.1 It includes 15 assessment sheets that allow for a comprehensive assessment of a country’s public financial management (PFM) digital landscape, including (1) the coverage of digital solutions across PFM subfunctions, (2) the degree of system interoperability,2 and (3) the level of maturity based on the three pillars. For the maturity level assessment, it provides detailed maturity tables similar or identical to those provided in Annexes 3 to 5. Functional attributes are detailed for all PFM subfunctions covered by the guidelines, as provided and explained in the handbook, while the IT architectural pillar can be applied to up to 11 systems or modules.

DiGIT offers a tailored, user-friendly experience and consolidates results in a visual, structured way. Users can customize the scope of their assessment according to their needs and choose not to complete all 15 worksheets. All worksheets include space for notes and provide drop-down lists of options to guide the assessment. The tool also comprises several result sheets which are autopopu-late based on the assessment. The result sheets consolidate and visualize the results, providing a clear overview of the overall PFM digital ecosystem as well as the individual solutions (Box Figure 3.1). The interactive visualization can serve as a practical basis for country authorities, as well as support teams from development partners, helping them identify strengths and weaknesses of the current digital landscape to prioritize areas for reforms.

Box Figure 3.1.
Box Figure 3.1.
Box Figure 3.1.

Sample Summary Reports from DiGIT

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Cho and Rivero del Paso 2023.Note: IT = information technology; PFM = public financial management.
Source: Based on Cho and Rivero del Paso 2023. 1 DiGIT is available as either a Macro-Enabled Excel Worksheet or an OpenDocument Spreadsheet, following the emphasis put on open solutions by the Guidelines, with both versions allowing for easy movement within and across worksheets. 2 Interoperability check is completed based on the expected data exchange among subfunctions. The foundational, intermediate, and advanced practices for each subfunction, including which systems it should be interoperable with, are detailed in the handbook.

Developing a Strategic Plan for Modernizing PFM IT Systems

This section presents a set of steps and key elements to consider in sequencing PFM digital reforms, developing the related strategy, and choosing system development options, using the assess-design-improve approach. While these steps are discussed here from an analytical and conceptual point of view, practitioners should bear in mind that these steps can be intertwined as they consider an iterative approach. The ten key steps are as follows.

  • 1. Conducting assessment as a basis to prioritize and sequence: Understand the current state of the organization’s PFM digital ecosystem in terms of coverage, interoperability, and levels of maturity in functional, IT architectural, and governance and management aspects.

  • 2. Clearly identifying priorities and objectives: This step should cover the following areas:

    • a. Identifying key gaps in system coverage and maturity: Identify the problems and challenges to be addressed, along with their root causes. Consider the need for changes in PFM business processes, legislation, institutional arrangements, and technology (Figure 10).

    • b. Balancing functional coverage versus deepening maturity of PFM IT systems: Balance the focus18 on increasing the overall coverage of PFM functions through IT systems in relation to deepening the functional and IT architectural maturity of systems covering specific functions, subfunctions, or processes. The sequencing approach should be in line with (1) the overall PFM priorities, (2) the degree of risk implied by an existing solution,19 and (3) the effect of a lack of digital solutions in supporting any given process.

    • c. Assessing feasibility: Prioritize process changes based on their potential effect and feasibility. Assess costs, required resources, and risks associated with implementing each change.

    • d. Developing vision statement and strategic objectives: Develop a vision statement that articulates the strategic objectives and expected scope of the reform. Clearly define benefits and improvements that digital solutions will bring to the organization and key stakeholders.

  • 3. Process mapping and streamlining to be digital by design: Map out current business processes, identifying redundancies, unnecessary manual steps, and bottlenecks that can be eliminated or streamlined through digital solutions. Consider relevant laws, regulations, and compliance requirements and identify needs for reform. The levels of maturity of the attributes can be used to map good practices in the design and modernization of digital solutions (Box 4).

  • 4. Defining stakeholder involvement: Identify key stakeholders and clearly define their respective roles and responsibilities. Establish technical working groups composed of functional, IT, and legal departments to provide a comprehensive view for mapping and redesigning business processes. Involve a broad range of stakeholders in the design, development, use, and maintenance of digital solutions (Figure 11).

  • 5. Conducting technology research: Conduct thorough research to identify digital solutions and technologies that can address priorities and objectives identified in step 2. The same problem could be addressed with different approaches and using different technological solutions (Box 5). Explore emerging technologies and consider factors such as cost, scalability security, and compatibility with existing systems. Solutions could include a mix of open-source and proprietary options.20

  • 6. Analyzing development choices and selecting the right one: Consider modular and loosely coupled architectures,21 which can include a mix of in-house, bespoke,22 and COTS solutions.23 The team should also strive for vendor-agnostic24 solutions and greater data ownership.25

  • 7. Conducting user analysis and prototyping: Conduct user analysis to ensure that digital solutions meet user needs.26 Prototype, test early27 and implement solutions in a collaborative environment. Consider user experience to improve data quality and reduce reporting costs (Box 6).

  • 8. Identifying data sources and interoperability requirements: Identify data sources to establish a single source of truth and promote interoperability. Consider application programming interface managers for data exchange, including its transformation when legacy systems are in place (Box 7).

  • 9. Developing a roadmap for implementation: Prepare a comprehensive roadmap, considering key factors such as timelines, resources, stakeholder engagement, risk management, and monitoring. Include key milestones and ensure alignment with the broader IT strategy of the government. Establish specific, measurable, achievable, relevant, and time-bound indicators for monitoring and evaluation throughout the development and implementation process (Annex 8). Embrace an agile and iterative approach to adjust the roadmap as needed.

  • 10. Conducting continuous monitoring and evaluation: Continuously monitor and evaluate processes to ensure they achieve desired outcomes. Use performance indicators and gather feedback from users and stakeholders. Foster innovation and embrace emerging technologies to stay ahead of evolving challenges and opportunities. Some additional considerations for implementing digital solutions in low-income and fragile and conflict-affected states are included in Annex 7.

Figure 10.
Figure 10.

Example Identification of Root Problems for Digital Projects

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: IT = information technology.
Figure 11.
Figure 11.

Stakeholders of PFM Systems

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: IT = information technology; PFM = public financial management

Using the Guidelines to Leapfrog with New or Updated Digital Solutions

The levels of maturity of the three pillars in the guidelines act as practices to follow when implementing new or updated digital solutions. When developing functional and technical requirements, the team should aim at the advanced level and adjust according to feasibility and availability of preconditions, instead of aiming at the foundational level. It is important for implementers to recognize that solutions at the advanced level are not necessarily more complicated when the necessary data is available. Furthermore, they need not be more expensive, especially when considering maintenance and risk management.

Specific attributes can also help countries leapfrog to digital transformation. Prioritizing adaptive and forward-looking solutions will lead to improved investments in technology, ultimately extending their lifespan and implying less exposure to cyber risks. By adopting a flexible and scalable architecture at intermediate and advanced levels, it becomes possible to iterate and make gradual improvements while also replacing outdated components in a cost-efficient manner.

Improving Payment Systems with Different Technologies

In Brazil, to control and improve the effectiveness of a targeted cash transfer program, the government developed an internet portal and mobile apps for citizens to self-enroll, used Big Data to verify eligibility, and expanded the use of digital payments through a real-time bank transfer tool.

In Costa Rica, the IMF Fiscal Affairs Department and Ministry of Finance organized a hackathon seeking to improve the payment system for social programs. Six solutions were developed, two of which were selected as the winning solutions. “Vision 360,” based on microservices, would reduce the time for a payment and verify it against a central payee database. “Sury,” an e-wallet app, would provide different user interfaces for daily payments.

Using User-Centered Design to Improve Quality of Data in Mexico

In 2018, Mexico’s Ministry of Finance launched a new system to improve the reporting of subnational government expenditures. The system is a web-based platform that allows subnational governments to submit their financial data in a standardized format (Global Initiative for Fiscal Transparency, Ministry of Finance, Public Credit of Mexico 2018). The system is an example of how user experience can be used to improve government services and has been successful in improving the reporting of subnational government expenditures. The user experience includes user-friendly interface, with gamification elements for reporting, clear and concise data formats, and robust and automated validations. By making it easy for subnational governments to submit their financial data, it has helped to improve the quality of the data and make it more accessible to the public. The data submitted by subnational governments is made available to the public through a user-friendly interface. This helps to ensure that the public can access the data and to hold subnational governments accountable for their spending.

Interoperability Platform in Madagascar

The government of Madagascar, with support from the World Bank’s Digital Governance Unit, has developed an interoperability platform. The platform is based on X-Road, an open-source software developed in Estonia (see Annex Box 9.3 for more information) which defines a set of interfaces and protocols. The platform in Madagascar connects the population registry to various public and private systems, enabling rapid exchange of data between them. Data interoperability between different organizations has also enabled exchange and faster delivery of services, including processing of business registrations.

Source: Based on World Bank 2021.

V. Conclusions

Despite significant investments in PFM digital solutions over the years, mainly focused on FMISs, most countries still face several challenges in fully leveraging digital technologies for effective PFM. These challenges include conceptual design issues, weak project management capacities, lack of interoperability, cyber risks concerns, and evolving needs in the PFM area. To address these challenges and drive digital transformation in PFM, it is crucial to consider digital initiatives holistically from the functional, technological, and governance perspectives.

The implementation of digital solutions and disruptive technologies requires careful design and consideration of a country’s digital infrastructure and connectivity, needs, and institutional capacities. Progress in modernizing PFM functions and IT systems is not always linear, and efficient processes and degree of digital adoption may not necessarily indicate the quality of PFM institutions. Governments should seek opportunities where digital solutions can yield rapid and substantial benefits, such as improving economic predictions, integrating digitalized payments with PFM systems, and adopting data-driven analysis and decision making.

The Guidelines are aimed at supporting countries in assessing existing PFM digital solutions, designing PFM digital transformation initiatives, and developing functional requirements for new PFM IT systems that take into account IT architectural and governance and management considerations. The development of the guidelines has benefited from a combination of expert knowledge, country cases, international standards, and academic literature. These guidelines emphasize the importance of data throughout its life cycle and highlight the significance of establishing strong foundations for successful digital transformation of PFM.

By implementing the Guidelines, governments can unlock the transformative potential of adopting digital technologies in PFM to improve fiscal policy outcomes, transform fiscal operations, and enhance governance and accountability.

Annex 1. Consultation and Piloting Process in Developing the Guidelines28

From the very beginning, the authors of the guidelines defined that the target audience comprises practitioners and implementers of PFM digital solutions, from the policy, management, and development point of view. In this sense, the development of the guidelines has benefited from an extensive consultation and piloting process with the intended users, which helped strengthen the knowledge base and consider different perspectives.

The development of the guidelines was initiated by a working group, to which internal and external experts and practitioners have contributed. This working group was followed by a more extensive consultation and piloting process, which has included a series of workshops and meetings with various stakeholders including ministries of finance, international financial institutions, development partners, and civil society organizations, which helped define the scope and approach, obtain feedback, and test the use of the guidelines.

During the 2022 Spring Meetings, the IMF Fiscal Affairs Department held a closed-door workshop where an earlier draft of the guidelines was introduced and discussed in four thematic groups. A total of 54 practitioners — inc luding 19 government officials29 and seven represent atives from civil societ y organizations30 —joined and provided valuable feedback. Throughout the rest of the year 2022, the authors continued to collaborate with both internal and external stakeholders to improve the guidelines. The consultation process involved, for example, a design thinking session held in August 2022 and a series of follow-up meetings attended by experts of the IMF and other organizations, such as the Digital Public Goods Alliance (DPGA), Organisation for Economic Co-operation and Development, World Bank, and more. The review process also included working sessions in seminars with ministries of finance of Southeast Asia31 and Africa.32

In March and April of 2023, the draft guidelines were introduced and used as guiding material at three regional interactive workshops and peer learning events, supported by the Gates Foundation and the Swiss State Secretariat for Economic Affairs. Together, these workshops hosted more than 70 participants that comprised functional and IT officials from 30 countries across three regions.33 Participants were provided with an opportunity to learn from their peers and regional best practices, while also having the chance to assess the level of maturity of an FMIS module of their choice and develop country roadmaps with priority actions to design or update their digital solutions for PFM using the guidelines. The workshops also benefited from contributions from DPGA, GovStack, and Public Digital. This allowed the Fiscal Affairs Department to test the use of the guidelines with the intended audience and helped capture their feedback and reflections. The workshops have been particularly useful in refining the contents and structure of the guidelines and sparked the development of the DiGIT Findings from the regional workshops are summarized in Annex Box 1.1. The guidelines and its DiGIT were also piloted in several countries in Asia Pacific and West Africa.

Regional Findings from the Piloting Phase

South and Southeast Asia: Countries in the region shared some strengths, including maintenance of data integrity, and faced similar challenges, including concerns related to cybersecurity and lack of interoperability. Countries also highlighted problems with implementing governance strategies that help promote transparency, efficiency, and effectiveness. Based on the guidelines, they identified initiatives to (1) improve data architecture, by unifying the chart of accounts for example; (2) strengthen cybersecurity, (3) improve interoperability, and (4) develop data governance frameworks.

Southern and Lusophone Africa: Main concerns for the African countries also related to interoperability and cybersecurity. The role of governance and management brought a stronger discussion compared with other regions, including highlighting that the information technology teams tend to be small and do not have all the necessary profiles to address the digital solutions needs. Based on the assessment results, countries made plans to (1) map systems availability to improve interoperability, (2) increase transparency, (3) review the legal framework, and (4) explore open-source alternatives and readiness for using cloud solutions.

Latin America: Latin American countries reported that their major concern relates to the evolution of needs which has not been paired with what the systems support, followed by lack of interoperability. Country roadmaps included plans to (1) improve interoperability, (2) strengthen project management, (3) increase user experience, (4) enhance data analysis, and (5) publish additional open data, directly from systems. After the presentation from GovStack Initiative, participants showed a strong interest in developing shared and reusable components across the ministry, the government, and even the region.

The workshop outputs demonstrated that countries across regions and varying levels of capacity have shared interests in their digital public financial management agenda. They also illustrate how the guidelines can serve as a useful tool for countries to self-assess and identify strengths and weaknesses to prioritize action areas for reform.

In this context, the guidelines provide an approach that has been tested to be applicable to economies in different regions and in different stages of digital development. The authors would like to take this opportunity to acknowledge and thank everyone who has contributed to the development of the guidelines.

Annex 2. PFM Functions and Subfunctions Covered by Guidelines

As mentioned in the Note, the functional attributes for PFM IT systems have been identified for 11 PFM functions, each with their respective subfunctions. The process of their identification is explained in the handbook, which also provides the detailed functional attributes for each subfunction in Annex Table 2.1.

Annex Table 2.1.

PFM Functions and Subfunctions Covered by the Guidelines

article image
Source: Authors. Note: PFM = public financial management.

Annex 3. Functional Attributes per Level of Maturity

Annex Table 3.1.

Functional Attributes per Level of Maturity

article image
article image
article image
Source: Authors. Note: API = application programming interface; ETL = extract, transform, load; IT = information technology; ML = machine learning; PFM = public financial management.

See Rivero del Paso (2020) for an example.

Online publication in websites that are frequently blocked or out of service impede full transparency.

Annex 4. IT Architectural Attributes per Level of Maturity

Annex Table 4.1.

IT Architectural Attributes per Level of Maturity

article image
article image
article image
Source: Authors. Note: Al = artificial intelligence; API = application programming interface; IT = information technology.

Or government wide, when available.

The supported technologies and platforms for system development for which the organization is prepared to ensure maintenance.

The hardware and network infrastructure necessary to support the system, scalability, availability, and performance requirements.

Specifying how the system’s services are to be managed, monitored, and supported, including service levels and user support processes.

Monitoring, performance metrics, and optimization strategies.

Defines how changes to the system will be managed and tested. Addresses version control, deployment procedures, and rollback plans.

Using mechanisms such as CSV, or an XML format such as JSON.

Here, centralization refers to the repository and not necessarily centralized control over the data.

APIs, repositories, and web services (SOAP or REST).

Which allow use through various devices, such as desktops, tablets, smartphones, and different monitor sizes, to accommodate different user preferences.

Contemplates conducting user interviews and surveys to gather qualitative and quantitative data, performing user journey mapping and task analysis to optimize user workflows, and applying information architecture principles to organize and structure the system’s content and functionality. The design process should also consider understanding the users’ needs and goals. This can be done by creating personas and scenarios or similar methodologies. Person as and scenarios are essential tools in user-centered design that help inform the development of user experiences. Other techniques include user journeys and user stories. These are complemented with wireframing and prototyping.

To provide real-time feedback and error prevention mechanisms to guide users in entering accurate data and avoiding mistakes.

Open-source software that has third-party support options.

Annex 5. Governance and Management Attributes per Level of Maturity

Annex Table 5.1.

Governance and Management Attributes per Level of Maturity

article image
article image
article image
article image
Source: Authors. Note: Al = artificial intelligence; API = application programming interface; IT = information technology; PFM = public financial management

Annex 6. Functional Attributes Applied to a Specific PFM Function

Annex Table 6.1.

Example of Treasury Management (Government Banking Arrangements)

article image
Source: Annex 3 and Handbook (forthcoming). Note: AI = artificial intelligence; ML = machine learning; PFM = public financial management.

Annex 7. Implementing PFM Digital Solutions in Low-Income and Fragile and Conflict-Affected States

Low-income and fragile and conflict-affected states can also aim to leapfrog from having simple or no digital solutions to advanced digital solutions for certain PFM functions. Their efforts should be guided by the following considerations, which can also be applicable to other countries at a relatively early stage of digital transformation of PFM.

  • For digital solutions, prioritize PFM functions with the highest effect. Start by investing in core PFM functions that imply major human resource burden and have a higher macro-fiscal effect, considering the number of transactions and proportion of the budget. Such investments could include, for example, digital disbursement of payroll, integration of planning and monitoring of public investments into a consolidated portfolio, and automation of controls during budget execution.

  • Invest time in reviewing and reengineering PFM processes. Ensure that sufficient time is spent on mapping and transforming practices to be digital by design. This is an essential step in any digital reforms that will allow maximum efficiency gain and should not be omitted in any case.

  • Use the advanced levels of maturity in the guidelines as main reference. Recognize that advanced-level solutions are not always more complex or expensive to implement, particularly when key digital building blocks are relatively straightforward to acquire and there is no burden of transitioning from a legacy system. Although it might not always be feasible, prioritizing forward-looking solutions will make for better investments in technology and prolonging their lifespan. Implementers should bear in mind that forward-looking solutions are not necessarily more costly when factors such as maintenance and risks management are considered. A flexible and scalable architecture in the intermediate and advanced levels will also allow implementers to iterate, improve digital solutions in a paced manner, and replace obsolescent components in a more cost-efficient way.

  • Adapt existing digital solutions. Explore adapting existing digital solutions from other countries or contexts to suit local needs. Applications documented as digital public goods or bilateral memorandums of understanding among countries can provide a starting point and accelerate the deployment of advanced digital solutions. Open-source solutions can provide cost-effective alternatives, allowing customization and localization to meet specific needs. Prioritize managed open-source solutions when critical processes are involved, and consider maintenance costs as part of the project.

  • Tailor solutions to the local context. Recognize local challenges and needs, such as internet access and energy disruptions. Ensure that digital solutions are prepared for low bandwidth and the system allows offline mode to save data in cache when internet access is down, connecting with the servers when it is back online. When targeting citizen services, prioritize mobile-based solutions, given the widespread use of mobile phones. Multichannel services delivery can bridge the digital divide and provide access to digital solutions even in areas with limited infrastructure.

  • Test digital solutions early. Begin with small-scale pilot projects in specific sectors or regions. Test the feasibility, effect, and acceptance of digital solutions in real-world scenarios before scaling up. Testing early will allow adjusting the strategy and the solutions before sunk costs are too large.

  • Ensure proper documentation and ownership rights. Whether the digital solution development is COTS, in-house, or bespoke, ensure that the delivery of full technical and functional documentation is part of the project and that the components can be maintained by third-party vendors. If the development is COTS, ensure that the government has the rights to its content in the database to exploit, mine with third-party services, and transfer to a new database when necessary.

  • Foster partnerships. Seek partnerships with international development organizations, nongovernmental organizations, and other stakeholders who can provide technical expertise and resources to accelerate digital transformation efforts. Partnerships with the private sector such as technology companies and startups, both local and international, could also support improving the technical expertise and access to emerging digital services.

  • Build enterprise architecture and capacity. Generate incentives to build the digital skills and capabilities of government officials, civil society, and the wider population. Build a technology team with clear roles to maintain the digital solutions and manage cyber risks.

  • Adopt policy and regulatory frameworks. Develop appropriate policy and regulatory frameworks to support digital transformation, including procurement of digital components. Address issues such as data protection, privacy, cybersecurity, and digital rights to build trust and confidence in digital solutions.

  • Secure long-term commitment. Recognize that digital transformation is a long-term endeavor which requires sustained commitment and resources from the government and stakeholders involved. Continuously evaluate progress, adapt strategies, and invest in scaling successful digital initiatives.

Annex 8. Indicators for Digital PFM Strategies

Indicators related to the improvements in process and execution are relevant for digital projects. However, it is also important to consider indicators that allow measuring the effect of digital solutions on different aspects of PFM, depending on the selected PFM function and the problem that has been identified to be addressed through a digital solution. Annex Box 8.1 includes examples of indicators at the output and outcome levels as a reference.

Examples of Indicators

Cost savings

  • Reduction in administrative expenses

  • Decrease in procurement costs

  • Reduction in duplicate payments

  • Cost savings from streamlined budget execution

Enhanced efficiency

  • Efficiency gains in financial processes

  • Decrease in transaction processing time

Improved policies

  • Increased alignment of budget allocations with policy priorities

  • Enhanced accuracy in revenue forecasting

  • Enhanced accuracy in budget forecasting

  • Strengthened compliance with fiscal rules and regulations

  • Reduction in budget variances between planned and actual expenditure

  • Improved policy outcomes through effective resource allocation

Improved transparency

  • Improved budget transparency as assessed internationally

  • Better quality of open data

  • Improved tracking and audit trail of financial transactions

Annex 9. Developing PFM Digital Solutions for Reusability: Identifying the Building Blocks

Traditionally, government agencies create their own systems or digital solutions to provide services tailored to the needs of a particular group of citizens or businesses. However, this approach may not always be the most efficient. Developing digital solutions for reusability in government means creating software solutions and applications that can be easily and efficiently reused by other government agencies or departments. Solutions can also be shared across governments, and with businesses or citizens, depending on the scope and objectives. Reusability is an important approach that promotes interoperability, efficiency, and cost savings, as it allows governments to avoid duplication of efforts and resources to create similar solutions.

Developing for reusability typically involves designing software solutions and applications in a modular way, with clear and well-defined interfaces and components that can be easily integrated with other systems. This enables governments to develop a library of reusable components that can be quickly and easily assembled to create new digital solutions. Developing for reusability also involves using open standards and technologies that are widely adopted and interoperable with other systems. This enables governments to avoid vendor lock-in and choose the best solutions based on their needs, without being constrained by proprietary technologies. Three main concepts related to reusability, which are related but have different purposes and scopes, are government digital building blocks (that is, Government Stacks or GovStacks), digital public infrastructure (DPI), and digital public goods.

  • GovStacks are sets of technologies and software solutions conceived as building blocks specifically designed to be shared within governments to modernize and streamline their operations, and to optimize the purchase of technology. They are modular, easily integrated, and can be reused by various government agencies with similar needs, reducing redundant development efforts. GovStacks are built using open standards, promoting interoperability, and reducing vendor lock-in. They are flexible and adaptable to the changing needs of government agencies. They are typically developed to address specific needs and challenges faced by government agencies, such as improving data management, citizen engagement, or service delivery.34 GovStacks are focused on providing government agencies with the tools they need to operate more efficiently, transparently, and accountably (see Annex Box 9.1).

  • DPI, on the other hand, refers to the foundational technologies that enable the delivery of digital services by governments (Annex Box 9.2). This includes secure digital identity systems, e-payment, and data exchange platforms. DPIs are typically designed to be interoperable across government agencies and are often built using open standards. While GovStacks are intended to be used primarily by government agencies and their staff, DPIs can also include online services that citizens and businesses use to interact with the government. GovStacks are typically owned and managed by government agencies or consortia of government agencies, whereas DPIs can be owned and managed by a mix of public and private sector entities. DPIs may also involve collaborative governance models that involve multiple stakeholders, including government agencies, private sector companies, and civil society organizations.

  • Digital public goods are open-source software, open data, open AI models, open standards, and open digital content that protect privacy and adhere to other applicable laws and best practices (Annex Box 9.3). They do no harm by design and could help countries attain their Sustainable Development Goals (Digital Public Goods Alliance 2023). For example, some countries have adopted data schemas proposed by international civil society organizations to identify the data fields within their systems or for publications in addition to observing the Government Finance Statistics standards for registering financial transactions.

In summary, GovStacks are focused on providing government agencies with specific software solutions, whereas DPIs provide the foundational technologies necessary for digitalization of several dimensions of the economy, including service delivery. Digital public goods, on the other hand, are open-source products and services designed for public good or interest. They can all promote reusability of digital solutions.

Singapore Government Tech Stack

The Singapore Government Tech Stack is a suite of digital tools and infrastructure used by the Singaporean government to drive digital transformation and deliver public services more effectively. It is managed by the Government Technology Agency (GovTech) of Singapore. It is designed to be modular and interoperable, allowing different government agencies to use different components according to their specific needs. It aims to provide government agencies with a set of open-source technologies and software solutions that can be used to modernize and streamline their operations. It comprises several components, including:

  • NECTAR-a cloud-based platform-as-a-service which streamlines and accelerates the process of application development. Built on open-source Docker technology in which the application code is packaged into containers that run identically on a developer’s machine or on any other cloud provider that supports Docker, NECTAR reduces the risk of an application malfunctioning as a result of differences in hardware configuration, or disparities between testing and production environments.

  • Government wide application programming interface exchange-APEX-that serves as a searchable library of application programming interfaces. Authentication protocols on APEX ensure that only authorized applications have access to highly confidential citizen data. At the same time, activities on the APEX platform are tractable as the system audits and logs the applications that have requested to pull data from government databases.

By providing these components as open-source technologies, GovStack Singapore aims to reduce the time and cost required for government agencies to develop and deploy digital applications, while also promoting interoperability and collaboration across different agencies and departments. The Singapore Government Tech Stack is constantly evolving, with new components being added and existing components being updated and improved over time.

Source: GovTech Singapore (https://www.tech.gov.sg/products-and-services/).

Digital Public Infrastructures in India

In India, digital public infrastructures (DPIs) have played a critical role in promoting financial inclusion and enabling citizens to access a range of digital services from the public and private sectors. The approach shifts the thinking from platform-centric model to protocol-based systems; the items included have later been coined as DPIs. India’s DPIs are a set of applications and systems powered by interoperable open standards and protocols that allow programmatic and secure access by the public and private sector to the underlying data and business logic through application programming interfaces that enable secure, paperless, and cashless transactions and identity verification. They consist of three main layers:

  • Identity layer, the Aadhaar system: Provides citizens with a unique digital identity based on biometric and demographic data. Aadhaar is basis for a range of services, such as using eSignature and performing Know Your Client electronically and has also played a critical role in facilitating opening bank accounts, obtaining loans, filing taxes, and the delivery of social welfare programs, such as Direct Benefit Transfer.

  • Payments’ layer, the Unified Payment Interface: Payment system that enables citizens to make digital payments directly from their bank accounts using their mobile devices. The Unified Payment Interface has been instrumental in promoting cashless transactions, which helps to curb corruption and promote financial inclusion.

  • Data layer, which refers to the Data Empowerment and Protection Architecture: Aims to restore the ownership and control over user data to its owners. This is done through the DigiLocker system, which allows citizens to store and share their documents electronically; a Consent Artifact, that allows capturing user consent to share their personal data with third parties; and consent managers that provide an interface to facilitate the “easy sharing and consumption of data from various entities with user consent.”

The components of India Stack, which form India’s DPIs, are operated and maintained by different agencies within the government.

Sources: India Stack (https://indiastack.org); Alonso and others 2023; Vir and Sanghi 2021.

Digital Public Good: X-Road Estonia

X-Road is a secure and decentralized data exchange platform originally developed in Estonia for use by the government, but now widely used by both public and private sectors in various countries. It enables different organizations to securely exchange data and services over the internet, with built-in security features such as access control, authentication, encryption, and auditing. X-Road provides a standardized interface for data exchange, making it easier for organizations to connect and collaborate, while ensuring the confidentiality, integrity, and availability of the data exchanged. As it has been developed as a digital public good, several countries have used X-Road to develop their own application programming interface’s gateway management.

Source: X-Road (https://x-road.global/).

Annex 10. Developing PFM Digital Solutions with Interoperability

Interoperability, defined as the seamless, secure, and controlled exchange of data between IT systems or applications, brings many benefits to governments. However, several papers analyzing the shortcomings of government digital initiatives point to a siloed approach to developing government systems including FMISs. The siloed approach implies that the data will be controlled and administered by one department or unit in isolation from the rest of an organization. Annex Figure 10.1 depicts a common configuration of PFM IT systems in which each PFM function is managed separately, with only few functions having one- or two-way interoperability with others. The main reasons for such siloed structure are (1) lack of collaboration across government agencies, (2) absence of a data governance policy and/or inadequate recognition of the strategic value of fiscal data, and (3) legacy IT systems that pose challenges for interoperability with newer systems. Siloed systems entail several problems, as discussed in Annex Box 10.1.

Annex Figure 10.1.
Annex Figure 10.1.

Current Common Siloed Setup of FMIS

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: FMIS = financial management information system.

In a desirable setup, in which the ministry of finance is capable of data-driven decision making, different PFM IT systems should have a data architecture and a service layer that allow them to interoperate and exchange data as needed. The advantage of interoperability is that it does not require unification and integration, as it relies on communication and interaction between different systems. This can be particularly helpful when dealing with legacy systems and/or when systems follow a modular development approach.

The approach of interoperability should also be applied more broadly to create one- or two-way connections even with systems and data sources outside of the ministry of finance (Annex Figure 10.2). This can be for automation and control of government functions that require data from other governments and/ or private or open systems (for example, the interoperability between the treasury module of an FMIS and systems of private banks for government payments and bank reconciliation purposes, or the seamless connection between an FMIS budget execution module and an e-procurement system for control of expenditure commitments). Interoperability also helps to improve data analysis for augmented decision making. An example of this is the interoperability with georeferenced data of private or open actors, which can provide useful insights to better target or distribute budget allocations for climate change adaptation.

Problems Created by Siloed Systems

  • Inconsistency and duplication: When systems do not interoperate, there is a common need to manage separate catalogs which could create a mismatch of updates (for example, changes in the chart of accounts done in the budget execution module, but not in the public investments modules). In addition, two systems could require the same data input twice, which is also prone to error for reasons such as different cut-off dates, sources, or reporting users.

  • Costly maintenance: Siloed systems are often developed with different technologies which create a disperse need of skills of the IT team, as well as a need to manage security specificities. In addition, they might duplicate licensing and servers needs. In sum, they result in overall costly setups for governments.

  • Difficulty to centralize: Data distributed and stored throughout multiple systems and data warehouses become extremely difficult to centralize and normalize into one coherent view required to understand the actual standing point of the public finances. Even if data of all the different systems can be aggregated or consolidated, it is frequently time-consuming and inaccurate.

  • Costly and error-prone user management: Managing multiple siloed systems also requires managing users separately; therefore, the addition or removal of users becomes a time-consuming and error-prone procedure. In a related form, users will require training for each separately managed system, which is also costly to an organization.

Annex Figure 10.2.
Annex Figure 10.2.

FMIS Setup Enabled for Interoperability with Internal and External Systems

Citation: Technical Notes and Manuals 2023, 007; 10.5089/9798400251566.005.A001

Source: Authors.Note: APIs = application programming interfaces; FMIS = financial management information system.

References

  • Allen, Richard, Yasemin Hurcan, Peter Murphy, Maximillien Queyranne, and Sami Yläoutinen. 2015. “The Evolving Functions and Organization of Finance Ministries.” IMF Working Paper 15/232, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Alonso, Cristian, Tanuj Bhojwani, Emine Hanedar, Dinar Prihardini, Gerardo Uña, and Kateryna Zhabska. 2023. “Stacking Up the Benefits: Lessons from India’s Digital Journey.” IMF Working Paper 23/078, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • AlphaBeta. 2018. Digital Innovation in Public Financial Management (PFM): Opportunities and Implications for Low-Income Countries. Singapore: AlphaBeta.

    • Search Google Scholar
    • Export Citation

  • Amaglobeli, David, Ruud de Mooij, Andualem Mengistu, Mariano Moszoro, Manabu Nose, Soheib Nunhuck, Sailendra Pattanayak, and others. 2023. “Transforming Public Finance Through GovTech.” IMF Staff Discussion Note, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Cangiano, Marco, Alan Gelb, and Ruth Goodwin-Groen. 2019. “Public Financial Management and the Digitalization of Payments.” CGD Policy Paper 144, Center for Global Development, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Cho, Chloe, and Lorena Rivero del Paso. 2023. Digital Solutions Guidelines Implementation Tool (DiGIT). Forthcoming. Washington, DC: IMF.

    • Search Google Scholar
    • Export Citation

  • Cooper, Julie, and Sailendra Pattanayak. 2011. “Chart of Accounts: A Critical Element of the Public Financial Management Framework.” IMF Technical Notes and Manuals 11/003, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Dener, Cem, Joanna Watkins, and William Leslie Dorotinsky. 2011. Financial Management Information Systems: 25 Years of World Bank Experience of What Works and What Doesn’t. Washington, DC: World Bank.

    • Search Google Scholar
    • Export Citation

  • Diamond, Jack, and Pokar Khemani. 2005. “Introducing Financial Management Information Systems in Developing Countries.” IMF Working Paper 05/196, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Digital Public Goods Alliance. 2023. “Digital Public Goods Standard.” https://digitalpublicgoods.net/standard/

  • Fritz, Verena, Marijn Verhoeven, and Ambra Avenia. 2017. Political Economy of Public Financial Management Reforms: Experiences and Implications for Dialogue and Operational Engagement. Washington, DC: World Bank.

    • Search Google Scholar
    • Export Citation

  • Global Initiative for Fiscal Transparency, Ministry of Finance, and Public Credit of Mexico. 2018. “Open Data Tutorial: Opening and Promoting Use of Budget Data.” https://fiscaltransparency.net/open-data-tutorial-opening-and-promoting-use-of-budget-data/

    • Search Google Scholar
    • Export Citation

  • GovStack. n.d.a “Use Case Simulation, Unconditional Social Cash Transfer Unconditional Social Cash Transfer.” https://simulation.govstack.global/

    • Search Google Scholar
    • Export Citation

  • GovStack. n.d.b “Our Approach.” https://www.govstack.global/our-approach/

  • Gracida, Tarick, and Lorena Rivero del Paso. 2019. “Fiscal Transparency Portals: A User-Centered Approach.” Global Initiative for Fiscal Transparency, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Gray, Cheryl Williamson. 1998. Public Expenditure Management Handbook. Washington, DC: World Bank.

  • Gupta, Sanjeev, Michael Keen, Alpa Shah, and Geneviève Verdier (Eds.). 2017. Digital Revolutions in Public Finance. Washington, DC: International Monetary Fund.

    • Search Google Scholar
    • Export Citation

  • Hashim, Ali. 2014. “A Handbook on Financial Management Information Systems for Government: A Practitioners Guide for Setting Reform Priorities, Systems Design and Implementation.” Working Paper 100509, World Bank, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Hashim, Ali, and Moritz Piatti. 2016. A Diagnostic Framework to Assess the Capacity of a Government’s Financial Management Information System as a Budget Management Tool. Washington, DC: World Bank.

    • Search Google Scholar
    • Export Citation

  • Hashim, Ali, and Moritz Piatti. 2018. “Lessons from Reforming Financial Management Information Systems.” Policy Research Working Paper 8312, World Bank, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Long, Cathal, Marco Cangiano, Emily Middleton, and James Stewart. 2023. “Digital Public Financial Management: An Emerging Paradigm.” ODI Working Paper, London: ODI.

    • Search Google Scholar
    • Export Citation

  • Misch, Florian, Brian Olden, Marcos Poplawski Ribeiro, and Lamya Kejji. 2017. “Nowcashing: Using Daily Fiscal Data for Real-Time Macroeconomic Analysis.” IMF Working Paper 17/227, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • National Interoperability Framework Observatory (NIFO). 2023. “Digital Public Administration factsheets.” European Commission. https://joinup.ec.europa.eu/collection/nifo-national-interoperability-framework-observatory/digital-public-administration-factsheets-2023

    • Search Google Scholar
    • Export Citation

  • Organisation for Economic Co-operation and Development (OECD). 2019. The Path to Becoming a Data-Driven Public Sector. Paris: OECD Publishing.

    • Search Google Scholar
    • Export Citation

  • Organisation for Economic Co-operation and Development (OECD). 2021a. Good Practice Principles for Data Ethics in the Public Sector. Paris: OECD Publishing.

    • Search Google Scholar
    • Export Citation

  • Organisation for Economic Co-operation and Development (OECD). 2021b. The E-Leaders Handbook on the Governance of Digital Government. Paris: OECD Publishing.

    • Search Google Scholar
    • Export Citation

  • Open Contracting Partnership. 2017. “Open Contracting Data Standard Version 1.1.” https://standard.open-contracting.org/latest/en/

  • Open Contracting Partnership. 2019. “Open Contracting Supporting Successful IT Procurement.” https://www.open-contracting.org/resources/open-contracting-supporting-successful-it-procurement/

    • Search Google Scholar
    • Export Citation

  • Open Contracting Partnership and CoST-Infrastructure Transparency Initiative. 2019. “Open Contracting for Infrastructure Data Standards Toolkit.” https://standard.open-contracting.org/infrastructure/latest/en/

    • Search Google Scholar
    • Export Citation

  • Open Ownership. 2022. “Beneficial Ownership Data Standard Version 0.3.” https://standard.openowner-ship.org/en/0.3.0/

  • Pimenta, Carlos, and Mario Pessoa (Eds.). 2016. Public Financial Management in Latin America: The Key to Efficiency and Transparency. Washington, DC: Inter-American Development Bank.

    • Search Google Scholar
    • Export Citation

  • Pimenta, Carlos, and Antonio Seco. 2021. Financial Management Information Systems (FMIS) – Project Guide: Strategic, Functional, Technological, and Governance Issues in the Design and Implementation of New Platforms for Public Financial Management Systems. Washington, DC: Inter-American Development Bank.

    • Search Google Scholar
    • Export Citation

  • Rivero del Paso, Lorena. 2020. Fiscal Data for Emergency Response: Guide for COVID-19. Washington, DC: Global Initiative for Fiscal Transparency. https://fiscaltransparency.net/fiscal-openness-in-emergency-response-covid-19/

    • Search Google Scholar
    • Export Citation

  • Rivero del Paso, Lorena, and Oscar Montiel. 2019. “Publishing Budget and Spending Open Data.” Global Initiative for Fiscal Transparency. https://fiscaltransparency.net/publishing-budget-and-spending-open-data/

    • Search Google Scholar
    • Export Citation

  • O’Neil, Kevin, and Nicole Rasul. 2021. “Co-Develop: Digital Public Infrastructure for an Equitable Recovery.” Rockefeller Foundation. https://www.rockefellerfoundation.org/report/co-develop-digital-public-infrastructure-for-an-equitable-recovery/

    • Search Google Scholar
    • Export Citation

  • Uña, Gerardo, Richard I. Allen, and Nicolas M. Botton. 2019. “How to Design a Financial Management Information System: A Modular Approach.” IMF How to Note 19/02, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Uña, Gerardo, Alok Verma, Majid Bazarbash, and Naomi N. Griffin. 2023. “Fintech Payments in Public Financial Management: Benefits and Risks.” IMF Working Paper 23/20, International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Vir, Aaryaman, and Rahul Sanghi. 2021. “The Internet Country: How India created a digital blueprint for the economies of the future.” Tigerfeathers, January 14. https://tigerfeathers.substack.com/p/the-internet-country

    • Search Google Scholar
    • Export Citation

  • World Bank. 2021. “Madagascar’s Digital Transformation Is Helping Deliver Better and Faster Services.” World Bank Blogs. https://blogs.worldbank.org/governance/madagascars-digital-transformation-helping-deliver-better-and-faster-services

    • Search Google Scholar
    • Export Citation

  • World Bank. 2022. “GovTech Dataset.” https://datacatalog.worldbank.org/search/dataset/0037889/govtech-dataset

  • World Bank. 2023. “Financial Management Information Systems (FMIS).” https://www.worldbank.org/en/topic/governance/brief/financial-management-information-systems-fmis

    • Search Google Scholar
    • Export Citation

Glossary

article image
article image
article image
article image
article image
article image
Source: ChatGPT (fne-tuned by authors), unless otherwise noted.
1

This technical note has benefited from contributions from Raquel Ferreira, Mauro Fridman, Soren Langhof, Ramon Narvaez, Soheib Nunhuck, Anupam Raj, Mark Silins, and Frankosiligi Solomon. The work is also informed by an initial working group, with the participation of Richard Allen, Felipe Bardella, Arturo Navarro, Ashni Singh, and Alok Verma. The work also benefited from valuable contributions for the piloting phase from Arvinder Bharath, Chloe Cho, Marcelo Lopez Cremona, Moulay El Omari, Noel Gallardo, and other previously mentioned contributors. The authors are also grateful for the support from Manal Fouad and Cigdem Aslan, and the contributions from the members of governments, civil society organizations, and international organizations, who have offered their valuable time, expertise, and insight during the piloting process, as recognized in Annex 1.

3

Although the phrases “digital by default” and “digital by design” can refer to slightly different concepts in different contexts, they retain their literal meanings in this note. Business processes are “digital by default” when digital technologies are integrated as the default or primary methods to execute those processes, eliminating the need for manual intervention. They are “digital by design” when digital technologies are systematically and proactively incorporated into the design or structure of those processes to foster innovation and transformation.

4

Particularly in cases where legacy systems are already in place.

5

For example, Gupta and others (2017) noted that Estonia skipped over several stages and now operates in a fully digitalized environment, using blockchain-distributed ledger technology and a “data embassy” that can reboot in the event of a cyberattack.

6

The guidelines are part of the IMF’s Digital Revolutions in Public Finance project, which has already made important contributions to the knowledge of digital transformation in fiscal policy. This project has been supported through the Digital Revolutions grant of the Bill & Melinda Gates Foundation.

7

Data creation, storage, usage, archival, and destruction.

8

While subfunctions and processes are distinct concepts, there can be overlaps as some outputs in PFM functions may entail single or multiple processes. The exact relationship between subfunctions and processes varies depending on the specific function of PFM.

9

DiGIT is a downloadable template that facilitates a comprehensive assessment of PFM digital solutions based on the general framework presented in this note and the detailed definitions presented in the handbook. The tool is available as a macro-enabled Excel worksheet and additionally as an OpenDocument spreadsheet.

10

This includes officials within and outside of the ministry of finance as the digital PFM framework covers line ministries and spending agencies, public procurement offices, and government IT departments, among others.

11

This consultation and piloting process included a series of workshops and meetings with various stakeholders including ministries of finance, international financial institutions, development partners, and civil society organizations.

12

Considering the different nature of the attributes, in a few cases the level of maturity does reflect what a basic adoption should consider, as opposed to the foundational requirements. This is specifically the case of the “flexible and scalable” attribute of the IT architectural pillar, which foresees a monolithic architecture in the first level.

13

During the piloting phase, this situation came up often when analyzing the “transparency in digital forms” of the governance and management pillar. In this case, several countries are implementing digital tools for transparency, while not having foundations that would also cover access to information requests. This situation highlights the willingness of governments to share information, but it also emphasizes the critical role played by legal and institutional access to information frameworks. These frameworks are essential in enabling transparency for aspects that may not be legally mandated in official reports or proactively disseminated by the government.

14

Enterprise architects help develop and implement a modern infrastructure network and its data management requirements, business processes, digital services, and applications. Governments should take advantage of this progress and use their expertise to further strengthen its systems.

15

Anything as a service encompasses a diverse range of products and tools available for purchase under an “as a service” consumption model. This is an evolution from the software as a service model.

16

The draft guidelines were used for IMF technical assistance in various countries. The experience showed that they allow a more objective and nuanced understanding of the issues and challenges faced in different country contexts and specific systems.

17

DiGIT was developed based on the experiences from the testing and piloting phase, which highlighted the need for a practical tool that would allow systematic implementation of the Guidelines.

18

Considering limited human and financial resources to design and implement digital solutions.

19

Dependence on obsolete technologies exposes organizations to significant risks such as limited support and maintenance, compatibility challenges, decreased efficiency and productivity, increased costs, compliance and legal issues, and hindered innovation and competitiveness. Obsolete technologies may lack vendor support, may not integrate well with modern systems, may impede productivity, may be costly to maintain and support, may not comply with evolving regulations, may hinder the adoption of emerging technologies, and may hamper an organization’s ability to innovate and remain competitive.

20

In choosing open source, consider the levels of maturity of the attribute “reusability” of the IT architectural pillar.

21

For more information refer to the IT architectural attribute “flexible and scalable” and its levels of maturity.

22

Referring to outsourced development of solutions, in which the organization does have ownership rights.

23

For more information, see Pimenta and Pessoa (2016).

24

For more information, refer to the IT architectural attribute “vendor neutral” and its levels of maturity.

25

For more information, refer to the governance and management attribute “data ownership” and its levels of maturity.

26

A survey by McKinsey revealed that governments that fail to design easy-to-use, well-designed web services risk eroding public trust and increasing delivery cost of digital services: https://www.mckinsey.com/industries/public-and-social-sector/our-insights/implementing-a-citizen-centric-approach-to-delivering-government-services.

27

Adopting an agile methodology would support adjusting the roadmap to circumvent roadblocks, whereas testing early with users would support failing fast before sunk costs are higher and it is more difficult to adjust. “Failing fast” is a concept commonly used in the context of innovation, entrepreneurship, and project management. It refers to quickly and intentionally identifying and acknowledging failures or weaknesses in a project, idea, or strategy to learn and adjust. It is gaining recognition in government as well. The principles of failing fast, including experimentation, learning, and iterative improvement, can foster innovation and agility in government.

28

The authors would like to acknowledge and thank everyone who has contributed to the development of the Guidelines.

29

From Argentina, Azerbaijan, Botswana, Comoros, India, Indonesia, Kenya, Malaysia, Maldives, Mexico, Namibia, Paraguay, Rwanda, Seychelles, Türkiye, and the United States of America.

30

Open Data Charter, ODI, Collaborative Africa Budget Reform Initiative, Global Initiative for Fiscal Transparency, Infrastructure Transparency Initiative, International Budget Partnership, and Open Contracting Partnership.

31

Through the South Asia Regional Training and Technical Assistance Center.

32

Through the Africa Training Institute and Regional Technical Assistance Center for Southern Africa.

33

The first workshop was held in Vietnam for seven countries in Asia Pacific (Cambodia, Indonesia, Laos, Malaysia, Nepal, The Philippines, and Vietnam); the second in Colombia for 10 countries in Latin America and the Caribbean (Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, and Peru); and the third in Mauritius at Africa Training Institute for 13 countries in sub-Saharan Africa (Angola, Benin, Cabo Verde, Comoros, Guinea-Bissau, Madagascar, Mauritius, Mozambique, Namibia, São Tomé and Príncipe, Seychelles, Zambia, and Zimbabwe).

34

See for example GovStack. “Use Case Simulation, Unconditional Social Cash Transfer Unconditional Social Cash Transfer.”

Other IMF Content

Other Publishers

  • Collapse
  • Expand
Cover Technical Notes and Manuals
Digital Solutions Guidelines for Public Financial Management
Author:
Lorena Rivero del Paso
,
Sailendra Pattanayak
,
Gerardo Uña
, and
Hervé Tourpe
Volume/Issue:
Volume 2023: Issue 007
Publisher:
International Monetary Fund
ISBN:
9798400251566
ISSN:
2075-8669
Pages:
69
DOI:
https://doi.org/10.5089/9798400251566.005
Figure 1.

Launch of FMISs, 1984–2022
Figure 2.

FMIS Functional and Data Exchange Capabilities
Figure 3.

Main Issues or Challenges Faced by PFM IT Systems in 30 Countries, by Region
Figure 4.

Stages of Adoption of Digital Tools and Solutions
Figure 5.

Uses of the Guidelines
Figure 6.

Target Audience and Users of the Guidelines
Figure 7.

Framework for Digital Solutions in PFM
Figure 8.

Principles and Attributes across the Three Pillars
Figure 9.

Interrelation between the Three Pillars
Box Figure 3.1.

Sample Summary Reports from DiGIT
Box Figure 3.1.

Sample Summary Reports from DiGIT
Figure 10.

Example Identification of Root Problems for Digital Projects
Figure 11.

Stakeholders of PFM Systems
Annex Figure 10.1.

Current Common Siloed Setup of FMIS
Annex Figure 10.2.

FMIS Setup Enabled for Interoperability with Internal and External Systems