Credit IMF
Credit IMF
Credit IMF
Credit IMF
Despite significant efforts to modernize their public financial management (PFM), governments around the world continue to face challenges with their financial management information systems (FMIS). Some of the biggest challenges reported by country authorities include: (1) lack of interoperability or siloed systems, (2) poor data quality, (3) cybersecurity risks, and (4) evolving needs in PFM that are not supported by legacy systems. In addition to addressing these challenges, governments also need to make important policy choices when designing and implementing digital transformation plans. In this context, the IMF, with funding support from the Bill & Melinda Gates Foundation, has just published the Digital Solutions Guidelines for PFM.
These Guidelines provide a comprehensive framework for developing a strategic plan for the digital transformation of PFM. This framework is structured around three pillars – Functional, IT Architectural, and Governance and Management – that are considered equally essential under a holistic approach for digital transformation projects (see Chart below). Each pillar comprises six principles, which are further broken down into more granular attributes that help promote efficient and transparent PFM operations while fostering innovation and managing digital risks. The framework also allows a graduated approach by providing three levels of maturity – foundational, intermediate, and advanced – for each attribute, helping to develop tailored digital transformation strategies that reflect country specific context and capacity.
The Guidelines emphasize the centrality of data as the backbone of digital PFM. The objective of utilizing data to enhance decision making and automate tasks in PFM cannot be achieved unless careful attention is paid throughout the data lifecycle. Redesigning business processes and applying automatic controls are other key factors to consider if governments are to avoid the automation of any existing inefficient processes. In terms of IT architecture, systems should be adaptable to changes in technology, be vendor-neutral and cloud-enabled where necessary, promote interoperability, and enhance operational efficiency and productivity. The Guidelines also stress the importance of a supportive regulatory framework and policies – on transparency, e-archiving, data protection, and more – that ensure effective and secure implementation.
In addition to the three-pillar framework, the Guidelines provide a step-by-step approach for creating and implementing PFM IT systems. This iterative process includes assessing the government’s existing FMIS to identify priorities, developing a clear vision for a new system, designing and implementing that system, and monitoring/evaluating its effectiveness.
The accompanying Digital Solutions Guidelines Implementation Tool (DiGIT) helps start this process, by facilitating the appraisal of different aspects of the existing PFM IT systems landscape. The DiGIT, which is available to interested parties, provides a standardized summary of results of the assessment, which can be useful for different stakeholders (see chart below).
The Digital Solutions Guidelines for PFM will serve as an important resource for governments and development partners to help build modern, efficient, and secure PFM IT systems. Policymakers and senior managers at ministries of finance, such as budget, treasury, accounting, and IT directors, could apply the framework set out in the Guidelines to make strategic decisions and ensure that opportunities for upgrading IT systems are seized where appropriate.
Officials with operational responsibility will find the detailed tables and individual components of the Guidelines useful for developing a roadmap for digital transformation of PFM. Development partners, private sector operators (including startups and software vendors developing digital solutions for PFM) and organizations working in CivicTech, public finance, and open government, are other potential users of the Guidelines. Many of these users have contributed to the development of the Guidelines, which reflect their needs and perspectives.
A forthcoming Handbook will provide a detailed guide for practitioners to use the guidelines.
