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The current economic landscape

To learn more about how public finance organizations can be a leading agent for the economic rebuild of our communities, register to watch this webinar “The key role of Public Finance Organizations in the economy rebuild.” During this webinar, you will gain strategic insights from other countries on how they are restarting the rebuild of their economy.

With governments now focused on post-pandemic economic recovery, three consistent themes have emerged:

  • The urgency of digital transformation: Governments now understand that digital technology and data are critical components of their nation’s infrastructure. Organizations that are further along their digital transformation initiatives proved more resilient. For example, the Government of Canada swiftly pivoted operations to deliver secure critical citizen services while simultaneously enabling approximately 250,000 employees to work remotely, thus minimizing the impact to government services.
  • Public-private partnerships: With organizations operating at their limits to deliver community services, to expedite the aperture of what these organizations can provide, governments must look to public-private partnerships (PPPs). The agility and additional capability that PPPs provide proved especially valuable when rival companies came together to hasten the manufacture of ventilators.
  • Focus on social impact and good sustainability: Governments earmarked funding in stimulus packages to fund programs that target environmental performance, social cohesion, and economic development. The EU Green deal aims to mobilize at least €100 billion over the period 2021-2027 in the most affected regions.1 The ASEAN Catalytic Green Finance Facility (ACGF) provides member states with technical assistance and access to over $1 billion in loans from co-financing partners.2

The digital transformation journey within public finance agencies

Governments are relying on public finance agencies to foot the bill. These institutions struggle with significant inefficiencies as they attempt to combat increased tax evasion and fraud:

  • Globally, it takes an average of 27.3 weeks to complete a VAT refund request. As a result, EU countries lose €137B in value-added tax revenues annually.3
  • Every year, governments globally lose $2 trillion due to corruption. To put this amount into context, that amount would solve world hunger, provide basic education to all children, eradicate malaria, and bridge the global infrastructure gap.4
  • With over $9 trillion in COVID-19 recovery packages planned, additional cracks in economic stimulus programs infrastructure will be exposed and reveal new, large opportunities for corruption and fraud.5

Digital Transformation technologies are a priority for governments and critical to how public finance agencies engage with individuals and businesses. The capability new technologies provide can ensure the highest levels of compliance and a more efficient economic rebuild.

Today’s governments are more proactive, collaborative, and transparent. As organizations attempt to enable intelligent, predictive capabilities they are finding the journey difficult. Successful outcomes can only be achieved when people, governance, technology, and data work together. Transparency builds trust and trust drives compliance. To accelerate the move to a culture of greater transparency and accountability, governments must adapt.

DT Journey

Microsoft’s vision for public finance ecosystem cooperation focused on economic rebuild

chart, radar chart

Along with accelerated digital transformation, a successful economic rebuild requires interagency cooperation. This cooperation needs a foundation based on verification of credentials to allow for the intelligent, real-time sharing of data. Today, many public finance agencies are unable to exchange data and leverage data analytics in a way that allows them to enact policies and procedures that most benefit communities, companies, and government.

Secure and scalable data collaboration helps governments better serve their residents, reduce administrative and compliance costs, and boost their nation’s competitiveness. As governments become more sophisticated they can begin to leverage machine learning and AI to move from reactive to predictive and proactive, so they minimize operational costs and can handle crises more effectively.

Public finance organizations embrace technology innovation to expedite economic rebuild efforts

Modern grants management is required to make sure the right support package reaches the right organization or individual at the right time. A good example of how technology accelerated appropriate aid delivery, is the work KPMG and GrantCare performed in order to help accelerate relief-fund disbursement. They also improve tracking and management of federal grants for the State of Georgia.

To ensure that governments reach vulnerable populations, two components are critical: verification for eligibility and advanced analytical capabilities to segment populations and profile. The Flanders Government of Belgium is piloting decentralized identity technology to lower the burden for citizens to opt into programs while improving their trust in the government. Chile’s Solidarity and Social Investment Fund (FOSIS) leverages data and AI capabilities to manage information and securely provide answers to citizens in distress. All application data—budgets, program information, and operational management—is displayed in dashboards to increase transparency while Role-Based Access ensure that parties view only the data they are supposed to.

The ease of doing business is extremely important to a nation’s competitiveness. The focus to improving this by reducing the administrative burden on businesses and individuals falls on organizations such as the Department of Information and Communications Technology Philippines. This organization modernized its Electronic Business and Permits Licensing System (eBPLS) to simplify processes that led to immediate cost and time savings, reduced human intervention, fewer errors, and fewer opportunities for fraud and corruption.  The solution implemented also enabled faster permit processing and increased revenues resulting from improved collections.

Similarly, the Ministry of Finance Poland developed a service called. “Twój e-PIT” (Your e-Personal Income Tax), an easy-to-use digital tool. Taxpayers can use e-PIT on any computer, smartphone, smart TV, or gaming console that is connected to the internet to file their taxes. Now they can file in as little as five minutes while continuing to offer a full suite of services despite the transition of its employees to remote working conditions due to COVID-19.

Accountability is an especially important measurement for governments. Protecting tax dollars from fraud, waste, abuse, corruption is top of mind for many organizations, politicians, and their constituents. To support these efforts Microsoft launched Anti-Corruption Technology and Solutions (ACTS) to empower governments and other stakeholders in their battle against corruption. With this initiative, Microsoft hopes to support governments in their quest to innovate with technology and expertise.

At Microsoft, we are committed to complying with the data privacy and security requirements of governments. We understand that government digital reality will continue to be hybrid. To better respond to government needs we are announcing Azure confidential computing. Azure confidential computing offers data protection that has been missing from public clouds. This new service helps organizations secure sensitive and regulated data that is processed in the cloud by isolating computations in a hardware-based trusted execution environment. It also protects data that is in use to prevent it from access by a cloud provider, administrator, or user. This is built on top of secure hardware with familiar tools, software, and cloud infrastructure.

Our vision for the public finance ecosystem creates a predictive, taxpayer-centric public finance sector. It also helps measure the social outcomes of public spending, leading to a skilled workforce, modern infrastructure, and environmental sustainability.

Watch the Digital Forum: “The key role of Public Finance Organizations in the economy rebuild,” and visit Microsoft in Government to learn more.


References:

1 A European Green Deal

2 ASEAN Catalytic Green Finance Facility

3 Paying Taxes 2020

4 We waste $2 trillion a year on corruption. Here are four better ways to spend that money | World Economic Forum

5 Tracking the $9 Trillion Global Fiscal Support to Fight COVID-19