Lessons from the IMF/World Bank Meetings
FreeBalance’s Public Financial Management (PFM) experts are well-versed in supporting governments to manage unexpected fiscal situations. Over the last nearly 40 years, we have collected good practices from our government customers and the international community and built these into how we work.
We have written previously about the role of PFM in pandemic crisis response, and FreeBalance has also developed a specialized advisory service to empower governments as they meet fiscal challenges related to crises head on.
The recent IMF/World Bank annual meeting in Morocco gave us further opportunity to reflect on crisis response and the role of digital transformation. Here are some of our key takeaways from the discussions.
What have we learned about crisis response?
In a nutshell: governments need to build public finance resilience.
The discussion around preparing for crises led to the question “is crisis actually the new normal?”, meaning we always need to be ready for an economic shock. It’s only through ongoing resilience that government can mitigate the effects of future crisis, especially in this “polycrisis” era, with growing public debt.
What lessons have we learned?
1. Crises are no surprise. Building on the idea that crisis response is the new normal, governments need to be ready, and not surprised, by the unexpected.
2. The intensity of crises, their impact, and the cost are all increasing. This is particularly apparent with climate-related crisis events, and is compounded with increasing fragility as a result of war or violence.
4. Governments, the international community, business and civil society need to work together if we are going to meet the challenges of this poly-crisis head on. Working across nations is particularly important, and industry divides need to be brought down for genuine collaboration.
5. Fiscal resilience mitigates crises. By investing time and effort in building effective public financial management processes, and prioritising good governance, governments can provide a buffer for the most extreme impact of crisis events.
How can the digital transformation of Public Financial Management (PFM) build resilience?
The bottom line: Building financial resilience requires a multidimensional and integrated approach.
How does PFM digital transformation, rather than traditional siloed PFM, enable fiscal resilience?
Fiscal silos with contradictory metadata do not provide decision-makers with accurate, timely, and comprehensive data while digitally transformed PFM supports full interoperability among system and access to external information to improve spending allocations, and early warning with visualization, big data analytics, data science and management alerts. Digitally transformed finance ministries have data literacy to enable evidence-based decisions.
It’s only through interoperability that multidimensional problems and opportunities can be addressed. This fuels a performance focus on inputs and spending, to outcomes. And, interoperability enables tracking the entire budget cycle from policy through budgeting, spending, procurement, human capital etc. to these outcomes – all automatically respecting controls and fiscal rules.
What does our crisis response service provide?
Our Crisis Support services are designed to:
- Support the reallocation of spending for through classification and process improvements
- Optimize controls to facilitate priority spending, enabling easy audit and reducing less important expenditures through workflow adjustments
- Enhance tracking, forecasting and transparency through integration of timely data across information systems.
To find out more about crisis support and how FreeBalance can support your organization to build resilience, contact one of our PFM experts.