AI in PFM

The OECD argues that artificial intelligence is beginning to strengthen public financial management mainly by augmenting, rather than replacing, existing systems and human decision-making. Current applications focus on areas such as macro-fiscal forecasting, budget preparation and monitoring, spending analysis, fiscal-risk detection, financial controls, classification of transactions, and automation of routine processes. The report emphasizes that the real foundation for successful AI adoption is not the technology itself but integrated, high-quality fiscal data, modern FMIS architecture, appropriate skills, and clear governance arrangements. It also cautions that explainability, data quality, accountability, and human oversight are particularly important in PFM because AI-generated outputs can influence major fiscal decisions and public resources. In the longer term, OECD sees the potential for PFM systems to evolve from descriptive and predictive analytics toward prescriptive AI that can simulate options and recommend policy or resource-allocation responses, while leaving final decisions and accountability with public officials.