Guinea-Bissau has launched a blockchain platform to enhance the management of its public sector wage bill, marking a significant advancement in fiscal transparency and governance. This initiative is a result of collaboration with the IMF and Ernst & Young, aiming to improve efficiency, data integrity, and accountability in managing salaries and pensions. By decreasing the wage bill’s share of tax revenues from 84% to 50%, the country is addressing long-standing fiscal challenges while promoting responsible public service delivery.
Guinea-Bissau has made significant strides in enhancing its public sector wage management by adopting blockchain technology as of May 2024. This initiative is part of the country’s collaboration with the International Monetary Fund (IMF) under the Extended Credit Facility (ECF). After a four-year partnership with the IMF and technological guidance from Ernst & Young, along with support from various financial partners, Guinea-Bissau has established a blockchain platform aimed at improving transparency and governance in the management of civil servant wages. This innovative digital ledger facilitates secure and transparent management of wage expenditures, allowing for close monitoring of salary and pension eligibility, approval processes, and disbursement activities. By drastically improving data integrity, the platform enables the timely generation of comprehensive fiscal reports for policymakers and the public. Additionally, this is one of the pioneering implementations of blockchain for public administration in sub-Saharan Africa, signaling a substantial commitment by Guinea-Bissau to address governance issues and enhance public service delivery. The platform employs a tamper-resistant ledger system that securely tracks each transaction in near real-time. It alerts officials to discrepancies in salary records, thereby reducing the need for extensive audit reporting while furnishing quality data for future use in Artificial Intelligence (AI) applications. Currently, while the system is not integrated with AI, it possesses the necessary data to facilitate the development of predictive models to identify potential misallocations or erroneous payments. Historically, in 2020, the public wage bill in Guinea-Bissau accounted for an alarming 84 percent of tax revenues, leading to inefficiencies in fiscal management. This ratio has since decreased to 50 percent, reflecting significant improvement yet still exceeding the recommended standards set by the West Africa Economic and Monetary Union’s fiscal convergence criteria. The blockchain initiative supports Guinea-Bissau’s strategic aims of bolstering fiscal transparency and governance as aligned with the IMF’s objectives. Anticipating future developments, the project is set to expand its scope to encompass additional ministries and government agencies. By November 2024, it aims to track the financial data for approximately 26,600 public servants and 8,100 pensioners. Key objectives include ensuring the eligibility of public officials for appointments, proper budgeting for wage payments, and comprehensive tracking of remuneration. Continued collaboration with the IMF and partner organizations underscores a mutual commitment towards enhancing governance and encouraging sustainable economic growth in the region. Guinea-Bissau’s narrative illustrates the impact of technological innovation coupled with concerted effort towards transparency and efficiency in governmental operations.
Guinea-Bissau, located on the western coast of Africa, has faced significant challenges in managing public finances and ensuring fiscal transparency. In recent years, the country has collaborated closely with the International Monetary Fund to reform its economic governance and enhance the efficiency of public sector expenditure. The adoption of blockchain technology marks a major turning point in this effort by providing a robust framework for tracking and verifying public sector salaries and pension payments, thereby addressing longstanding issues related to corruption and mismanagement. This initiative is particularly noteworthy as it represents one of the first uses of blockchain technology for governmental financial management in sub-Saharan Africa, highlighting Guinea-Bissau’s pioneering role in this domain.
In summary, Guinea-Bissau’s implementation of blockchain technology to manage its public wage bill is a groundbreaking step towards improved fiscal governance and transparency. By establishing a secure digital ledger, the country enhances the integrity of wage data and reduces the potential for fraud. This initiative not only aims to make government operations more efficient but also fosters accountability, ultimately serving to restore public trust in fiscal institutions. The ongoing expansion of this project reflects a commitment to embrace innovative solutions for economic stability and sustainable development.
Original Source: www.imf.org
