Digital PFM Paper by ODI
Digital Public Financial Management: An Emerging Paradigm" examines how traditional digitalization approaches have led to rigid and outdated public financial management (PFM) systems. It advocates for adopting flexible, user-centric digital strategies that integrate PFM into a broader ecosystem of shared digital infrastructure, data, and services. The authors emphasize the importance of improved data governance and the pivotal role of finance ministries in driving comprehensive government digitalization. They also highlight that lower-income countries stand to benefit significantly from these digital advancements.
Read MoreDigital Solutions Guidelines for PFM
Digital transformation of public financial management (PFM) offers numerous benefits, including enhanced fiscal operations, reduced manual errors, and increased efficiency through process automation. It supports budget planning, resource allocation, and expenditure control, while providing real-time financial data for better monitoring and analysis of macro-fiscal policy objectives. This promotes fiscal transparency, budget credibility, and accountability. Financial management information systems (FMISs) are key digital solutions that automate PFM processes, offering a complete record of financial transactions and supporting decision-making. Despite their evolution and widespread adoption, challenges such as lack of interoperability, cybersecurity concerns, and inadequate project management still hinder their effectiveness in many countries.
Read MoreWorld Bank: Bringing Public Financial Management into the 21st century
The PEFA Global Report on Public Financial Management (PFM) highlights the importance of robust PFM systems, especially in the wake of the COVID-19 crisis. Drawing on over 675 assessments in 154 countries, the report provides a comprehensive view of PFM trends and performance. Key findings indicate that countries excel in budget preparation but struggle with execution, with internal audits and fiscal risk management being the weakest areas. The report emphasizes the need for gender-responsive budgeting and highlights case studies from Argentina, Ethiopia, Ukraine, and West Bank and Gaza. It underscores the challenges and opportunities for strengthening PFM in a post-pandemic world, stressing the importance of maintaining audit trails and reverting to normal controls after emergency spending. The report also notes the critical role of PFM in ensuring effective public services and suggests that PEFA data can aid in better policymaking and building trust in governments.
Read MoreWorld Bank: A Handbook on Financial Management Information Systems for Government
A Practitioners Guide for Setting Reform Priorities, Systems Design and Implementation (Based on a compilation of experiences in World Bank-financed projects)
Read MoreLessons from Reforming Financial Management Information Systems
Financial Management Information Systems (FMIS) are crucial for public financial management, significantly aiding in budget execution, fiscal discipline, resource allocation, and operational efficiency. The World Bank and other institutions have heavily invested in FMIS globally. Despite their potential, FMIS reforms are complex, with limited evidence on their causal effects. This study introduces a framework for FMIS reform, focusing on three dimensions: the diagnostic phase, the systems development lifecycle, and coverage and utilization. Achieving optimal FMIS performance and budget management improvements requires a coherent approach across these dimensions. The study also offers lessons from a systematic review of FMIS literature, project evaluations, case studies, and World Bank documentation.
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