Arab Monetary Fund issues second issue of "Policy Brief" on "Digitization of Public Finance"

02/05/2019


The Arab Monetary Fund launched a new periodic series entitled "Policy Brief", which aims to support the decision-making process in Arab countries by providing brief research papers that address the most important priorities and topics of interest to member countries, with recommendations to policy makers.

The second issue of this series touched on the topic of digitizing public finances. He pointed out that the unprecedented digital changes witnessed by the world have affected all aspects of life and resulted in significant gains in productivity and competitiveness through its role in restructuring the performance of many Production and service sectors, as well as the mechanisms of the functioning and performance of macroeconomic policies, including public finance. As an extension of these transformations and within the framework of the Fourth Industrial Revolution and its associated technologies such as industrial intelligence, large data, the blockbuster, biotechnology and other technologies, many governments have taken advantage of these techniques to increase the effectiveness of public finance management in achieving their objectives Through the development of more efficient mechanisms to raise and spend public funds to achieve the objectives of fiscal policy. The digitization of public finances addresses many aspects, including the digital transformation of managing the two aspects of the public budget (revenues and public expenditures), especially through the adoption of electronic collection and payment systems.

On the public revenue side, tax digitization has helped many countries increase tax collection levels and expand the tax base by shifting to electronic systems for tax compliance, compliance, collection and e-billing. While digitizing public expenditure has contributed to the efficiency of government procurement systems, combating corruption, improving the efficiency of social remittance systems by creating more accurate databases for those eligible for support, and channeling cash transfers to them through electronic payment channels in an easy, secure and verifiable manner such as telephones Using biometric fingerprint signatures, thereby enabling governments to reach a broad base of beneficiaries at the lowest cost. In addition, digitization of public finances is also linked to the adoption of the latest technical systems in relation to other aspects of financial policy, including the Government Financial Information Management System, the Debt Management and Analysis System, and other systems that have helped to increase the levels of transparency, comprehensiveness and accuracy of the state budget processes.

In this context, it is estimated that the shift to collection and e-payment on both sides of the public budget (revenues and overhead) can help achieve annual economic savings estimated at at least 0.8 to 1.1 per cent of GDP per year in countries Developing countries, from $ 220 to $ 320 billion. Economic gains may exceed this level if indirect positive externalities are taken into account. For example, digitization of taxes has led to a 50 per cent increase in India's tax base in less than a year, which has helped generate more public revenue.

The second issue of the "Policy Brief" series referred to a number of international experiences in the digitization of public finances, pointing out the unevenness of the experiences of countries in the digital transformation of the public budget processes. For example, all government payments associated with social remittances in the United States have been digitized since 2013. Other developed countries have also made significant achievements in this regard, with the proportion of non-digital government payments in Spain and Italy currently at 10 per cent. Countries such as the UK, Australia and Russia can now collect income and corporate taxes immediately through payroll and e-billing systems.

The second issue of the policy brief referred to examples of the digitization of public finances in some Arab experiences. The Arab governments, within the framework of their national plans for digital transformation and their attempts at financial reform, have tended to shift towards digitizing public finances. Many Arab countries have achieved significant successes in this regard. In Jordan, financiers are able to pay electronic tax on income and sales tax electronically. In the UAE, the Ministry of Finance has adopted a system of software and digital payment gateway to enhance the delivery of public services within the electronic dirham system, which was launched in 2001 and was developed in 2011. The e-Dirham system is characterized by multiple types of cards, Requires a bank account, all pre-paid, refillable and based on credit card withdrawal, paid or encased, in a smart and secure manner. In Saudi Arabia, SADAD's ePayment platform has been developed to serve individuals, businesses and the government sector by operating an efficient, secure infrastructure and best practices. Through this platform, electronic payment of VAT. In Egypt, the shift towards digitization of public finances comes in the context of the "Sustainable Development Strategy: Egypt's Vision 2030" and the National Program for Economic Reform, which includes a package of fiscal reforms to modernize public finance management, improve resource mobilization and public spending efficiency using digital technologies, Ministry of Finance system for the dissemination of payment and electronic collection. In Morocco, the Directorate General of Taxation has developed the online tax payment service to enable taxpayers to recognize and pay electronic taxes on sales, companies and income. The same is true in Tunisia, where financiers are allowed to pay both VAT and corporate income tax. Mauritania has also adopted an electronic customs clearance system that has helped to reduce the time required for such transactions.

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