## sdnea2023004

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### Executive Summary — Connectivity, GovTech dividends, and investment needs
- About 3 billion people globally are not connected to the internet.
- Nearly 3 billion people worldwide do not use the internet; another 2 billion are poorly connected, relying on 3G or slower mobile broadband.
- Internet use in 2021 by region:
  - Advanced economies: 91 percent
  - Emerging market economies: 70 percent
  - Low-income developing countries: 33 percent
- Internet coverage (share of population living within an area with a mobile signal) substantially exceeds internet access, indicating affordability, device, and skills constraints.
- Mobile device 5G subscriptions were about 160 million in 2020.
- Within countries, the digital divide is most pronounced across gender and age; in low-income developing countries even women with tertiary education are less likely to own a mobile phone than men with less than primary education.
- IMF estimate of global investment needs to provide universal broadband connectivity (SDG 9.c): $418 billion.
  - On average equals:
    - 3.5 percent of GDP in low-income developing countries
    - 0.7 percent of GDP in emerging market economies
- GovTech dividends highlighted:
  - Revenue administration: GovTech solutions can enhance revenue collection significantly (exact magnitudes discussed in the note).
  - Public financial management: automating budget payments and e-procurement improve budget management and fiscal transparency.
  - Education: increasing internet use from 10 to 90 percent is associated with up to a 25 percent rise in average primary and secondary education scores.
  - Health: digital tools improve quality, coverage, and reduce spending inefficiencies (examples and country cases provided).
  - Social safety nets: digital Treasury payments could expand coverage of social assistance programs for the extremely poor by 7 percent.
- Barriers and uneven progress:
  - Only half of low-income developing countries allow taxpayers to register online.
  - Large gaps in coverage and extent of adoption persist despite progress in TSA IT system rollouts.
  - Digital adoption requires infrastructure, devices, affordability measures, skills, and user uptake.
- Policy summary:
  - Pursue comprehensive reform plans embedded in national digital strategies aligned with country digitalization maturity.
  - Supply-side: incentivize or directly invest in digital infrastructure.
  - Demand-side: address internet affordability (for example, discounts on service fees), device affordability, and digital literacy.
  - Implementation requires legal/institutional reforms, data security/privacy safeguards, citizen-centric design, and maintaining traditional service channels for those excluded.

### Internet users, adoption drivers, and digital divide
- Internet usage and speeds:
  - Internet use accelerated during COVID-19 at the intensive margin (quality/speeds) but not the extensive margin (coverage) (Amaglobeli and others 2023).
  - Annual growth of internet users accelerated only in emerging market economies during COVID-19, driven mainly by India.
  - Improved download/upload speeds noted across all income groups since the outbreak of COVID-19.
- Digital divide within countries:
  - Mobile ownership is significantly lower for women and the elderly across all income groups.
  - Gender gaps in low-income developing countries:
    - Less-than-primary-educated women are 10 percent less likely to own a mobile phone than men with comparable education.
    - Women with tertiary education are 1.2 percent less likely to own a mobile phone than less-than-primary-educated men.
  - Age gaps: those over age 65 less likely to own mobile phones than those younger than age 20, after controls.
  - Mobile phone ownership correlates with internet-based activities:
    - Mobile phone owners in low-income developing countries are 34 percent more likely than the national average to pay bills online.
    - Mobile phone owners in low-income developing countries are approximately 40 percent more likely than the national average to shop and bank online or receive government transfers using a phone.
- Drivers and costs of adoption:
  - Global investment needs: $418 billion, assuming universal 4G cellular broadband with approximately 40–50 gigabytes monthly data.
    - Emerging market economies: $305 billion, or 0.7 percent of GDP.
    - Low-income developing countries: $102 billion, or about 3.5 percent of GDP.
    - Geographic investment needs (percent of GDP):
      - Sub-Saharan Africa: 4.5 percent of GDP.
      - Middle East, North Africa, and Pakistan: 1.7 percent of GDP.
      - Caucasus and Central Asia: 1.6 percent of GDP.
      - Latin America and the Caribbean: 1 percent of GDP.
  - Mobile-broadband basket prices:
    - Nominal prices for a data-only mobile-broadband basket dropped by more than half since 2015 to less than $5 a month in 2021 in emerging market economies and low-income developing countries.
    - Relative to per capita income, the average mobile-broadband-basket price in 2020 was nine times higher in low-income developing countries than in advanced economies.
  - Demand elasticity:
    - Demand for internet is most price responsive in low-income developing countries and almost unresponsive in advanced economies.
  - Short-term predictors of internet use: infrastructure coverage, internet price, and usability (for example, local-language applications).
- Policy implications on affordability and uptake:
  - Supply-side: reduce high entry costs; public spending to support inclusion in remote/rural areas.
  - Demand-side: targeted price discounts for devices or subscriptions; discount vouchers.
  - Complementarity: demand-side incentives catalyze private investment as broadband markets develop; supply-side may be more effective at initial stages.
  - Public programs (for example, US Affordable Connectivity Program) can be cost-efficient and spur growth.

### Sectoral impacts of GovTech — empirical findings and examples
- Distributional effects and fiscal outcomes:
  - Adoption of digital payments and e-procurement could increase income shares of the bottom 50th percentile, and especially for women, in countries at the top quartile of GovTech maturity.
  - Improvement in expenditure efficiency depends on GovTech maturity, digital skills, network coverage, and state capacity.
- Education:
  - Increase in internet use from 10 to 90 percent associated with up to 25 percent increase in average primary and secondary education test scores.
  - Moving from 0–20 percent to 80–100 percent internet-use bins improves average test scores by 29–45 points.
  - With sample average test score of 478 and minimum of 300, the 45-point increase yields a 25 percent increase over the effective baseline average of 178 points.
  - Caveats: EdTech benefits vary; internet access can distract or spread misinformation; parental controls and teacher training matter.
- Health:
  - Electronic health records: Estonia—15–17 percent of prescriptions changed after drug-interaction warnings via e-prescription.
  - Korea (2021): mobile-phone public personal health record integrating medication and vaccination data.
  - Telemedicine and digital services: Brazil’s e-SUS increased primary care digital records; Ping An’s “Good Doctor” had 315 million registered users by 2019.
  - Procurement and pooled procurement: pooled mechanisms reduce prices and delivery delays but require longer advance planning.
  - Disease surveillance: digital sources (social media, internet searches) and systems (IDSP in India, eDEWS in Yemen) help outbreak detection and tracking.
- Social safety nets and delivery:
  - GovTech strengthens identification, verification, and delivery to reduce leakages and fraud.
  - Automation of budget payments could help expand coverage of social assistance for the extremely poor by 7 percent.
  - COVID-19 experience:
    - Countries using digital databases/trusted data sharing reached on average 50 percent of their population.
    - Countries collecting new information reached on average only 15 percent.
    - Countries with social registries and integrated databases expanded faster and broader; in limited-capacity countries (Democratic Republic of the Congo and Togo), mobile phones were essential for registration and mobile money transfers.
  - Typical digital payment channels: bank accounts or combinations of mobile money and bank accounts; some countries introduced digital payments for the first time during COVID-19 (Angola, Cameroon, Liberia).

### Doing it right — national strategy, implementation guidance, and GovTech stages
- National digital strategy essentials (OECD seven-dimension alignment): access, use, innovation, jobs, society, trust, market openness, data governance.
- Four foundational elements:
  - Digitalize services around users; adopt agile methodologies.
  - Promote private sector participation while accounting for privacy and social/ethical/environmental impacts.
  - Mitigate risks via legislation, training, and cyber risk management (80 percent of data breaches involve employee error, Verizon 2022).
  - Focus on hard-to-reach households to reduce the digital divide.
- Stages of fiscal digital transformation:
  - Digitization: replicate manual processes digitally.
  - Digitalization: process digital by default with major automation (rules-based triggers).
  - Digital transformation: public finance processes digital by design with business process reengineering; potential to leapfrog (Estonia example).
- Three interrelated pillars for digital public finance:
  - Functional: support, automate, or redesign business processes.
  - IT architecture: technology attributes, including cybersecurity.
  - Governance and management: legal and institutional frameworks.
  - All three pillars must be considered holistically for successful implementation.

### IMF capacity development, functional attributes, and data as a strategic asset
- IMF support:
  - Focuses on institutional capacity, strategic/operational support, and knowledge dissemination (peer learning, training, workshops).
  - Publishes technical/operational notes and collaborates to organize hackathons and develop open-source digital public goods when feasible.
  - Supports rollout and exploitation of FMIS capabilities and revenue administration digitalization to improve efficiency, reduce collection costs, and facilitate voluntary compliance.
  - Supports strengthening data management and analytics due to massive data generation from GovTech.
- Functional examples and data value:
  - Mozambique: FMIS data enabled detailed transactional reporting and analytics.
  - Brazil: SPED digital accounting platform transformed business processes and increased data volume.
  - Guatemala: electronic tracking devices on cargo trucks reduced diversion of goods by 99 percent.
  - AI use cases: forecasting Treasury cashflows, identifying high-risk payments, contract risk detection, robotic process automation for payment orders.
  - AI risks: bias from training data and data privacy concerns.
- Architectural and modular principles:
  - IT architecture should be flexible, scalable, forward-looking, intuitive, secure, and maximize reusability.
  - Modular approach often preferable to full-system replacement; suitability depends on coupling/cohesion of existing systems.
  - Digital building blocks and reusability (India Stack; GovTech Stack of Singapore) promote efficiency and cost savings.

### Governance, change management, data protection, and digital risk management
- Legal and institutional reforms:
  - Update laws/regulations to enable innovation, interoperability, e-archiving, and institutional coordination.
  - Streamline procurement laws to address digital technology challenges.
- Project and change management essentials:
  - Well-designed plans, capable teams, agile procurement, cross-functional project teams, leadership support, training and communication plans (Maldives example).
  - Consider personnel impacts: new skills and roles; plan for obsolete jobs/skills.
- Data protection and cybersecurity:
  - IBM estimate: average cost of a data breach in 2022 was $4.35 million per incident; 83 percent of organizations experienced more than one breach.
  - Government-sector breaches can have national-security consequences and erode trust.
  - Many countries lack comprehensive data protection legislation.
  - Robust frameworks should protect privacy, prevent indiscriminate data collection, hold entities accountable for breaches, and incentivize proper handling and cybersecurity investment.
- Managing digital risks and resilience (Annex V highlights):
  - Key risks: privacy distrust, CNI vulnerability, scarce cybersecurity talent, human-error-driven breaches (80 percent contribution), procurement failures, data governance gaps, and the digital divide.
  - Example: Costa Rica ransomware attack crippled customs and disrupted services for more than two months.
  - Strategic responses include classifying critical assets, planning for continuity, coordinated cyber incident management, training, emergency response teams, and incentives to grow cybersecurity talent.

### Conclusions, fiscal policy implications, and caveats
- Digitalization can transform public finances and deliver large social dividends if implemented well: better access to services, improved education and health outcomes, stronger safety nets, increased revenue collection, and greater transparency and efficiency.
- Governments must facilitate digital adoption via supply- and demand-side policies and embed programs in national digital strategies; IMF provides capacity development support.
- Fiscal policy redesign opportunities facilitated by digitalization:
  - Risks: new avenues for tax evasion (for example, cryptocurrencies) require adapted policies.
  - Opportunities: more extensive third-party information enables better taxation of capital income; linking transaction data to personal income could enable progressive VAT design.
  - Spending: tighten eligibility to achieve similar/better redistribution.
- Limits and prerequisites:
  - Digitalization is not a substitute for strong institutions; benefits materialize only with institutional strengthening.
  - Needs: regulatory changes, data security/privacy safeguards, institutional capacity, digital literacy, and adequate infrastructure (hardware and connectivity).
  - Remaining exclusion risks: preserve traditional service delivery channels for those left on the wrong side of the digital divide.

*Source: sdnea2023004*

### Executive Summary ......................................................................................................

### Executive Summary

### Key findings on connectivity and the digital divide
- About 3 billion people globally are not connected to the internet.
- Nearly 3 billion people worldwide do not use the internet; another 2 billion are poorly connected, relying on 3G or slower mobile broadband.
- Internet use in 2021 by region:
  - Advanced economies: 91 percent
  - Emerging market economies: 70 percent
  - Low-income developing countries: 33 percent
- Internet coverage (share of population living within an area with a mobile signal) substantially exceeds internet access, indicating affordability, device, and skills constraints.
- Mobile device 5G subscriptions were about 160 million in 2020.
- Within countries, the digital divide is most pronounced across gender and age; in low-income developing countries even women with tertiary education are less likely to own a mobile phone than men with less than primary education.

### Investment needs and fiscal context
- IMF estimates: $418 billion in (public and private) investment is necessary to bring connectivity to unconnected households globally (Oughton, Amaglobeli, and Moszoro 2023).
- On average, this equals:
  - 3.5 percent of GDP in low-income developing countries
  - 0.7 percent of GDP in emerging market economies
- Many governments can accelerate universal connectivity through direct interventions on both supply and demand sides.

### Dividends from GovTech in public finance and services
- GovTech can strengthen public finance operations and improve delivery of basic services.
- Revenue administration: GovTech solutions can enhance revenue collection significantly (exact magnitudes discussed in the note).
- Public financial management:
  - Automating budget payments can improve the quality of budget management.
  - E-procurement platforms can boost fiscal transparency.
- Education: An increase in internet use from 10 to 90 percent is associated with a rise in average primary and secondary education scores of up to 25 percent.
- Health: GovTech can improve quality, increase population coverage, and reduce spending inefficiencies.
- Social safety nets: Adopting digital technologies for Treasury payments could help expand coverage of social assistance programs for the extremely poor by 7 percent.

### Barriers to adoption and uneven GovTech progress
- Progress in GovTech adoption has been uneven across countries.
- Example gaps:
  - Only half of low-income developing countries allow taxpayers to register online.
  - Large gaps in coverage and extent of adoption persist despite progress in rollout of treasury single account IT systems.
- Digital adoption requires not only infrastructure but also devices, affordability measures, skills, and user uptake to realize benefits.

### Policy recommendations and implementation guidance
- Governments should pursue comprehensive reform plans embedded in national digital strategies that account for country digitalization maturity.
- Interventions can be on both supply and demand sides:
  - Supply-side: incentivize investment or directly invest in digital infrastructure.
  - Demand-side: allay concerns about internet affordability (for example, via discounts on service fees) and support digital literacy.
- Successful GovTech implementation requires:
  - Full use of functional capabilities of information systems by users.
  - Appropriately designed and executed legal and institutional reforms.
  - Effective safeguards for data security, privacy, and digital resilience, including cyber risk aspects, to maintain trust and promote adoption.
  - Citizen-centric design principles and close stakeholder collaboration to maximize inclusion and uptake.
- GovTech must be inclusive; traditional service delivery should remain available for those on the wrong side of the digital divide.

*Staff Discussion Notes: Transforming Public Finances through GovTech — Executive Summary*

### 1. Internet Users (Percent of population)

### 1. Internet Users (Percent of population)

### Internet usage and speeds: key findings
- Internet use accelerated during COVID-19 at the intensive margin (proxy for the quality of connection) but not at the extensive margin (the coverage of population) (Amaglobeli and others 2023).
- Annual growth of internet users accelerated only in emerging market economies during COVID-19, driven mainly by the rapid surge of internet use in India, which had started before the outbreak of the pandemic.
- Internet use in advanced economies and low-income developing countries has remained at the historical trend since the outbreak of COVID-19.
- Improved speed is noted among existing users: the average download/upload speed since the outbreak of COVID-19 accelerated considerably across all income groups.
- Trend analysis: trend lines in panel 4 are based on pre-pandemic developments; the gray line refers to March 2020 (when the World Health Organization declared COVID-19 a global pandemic); the dotted line is the fitted trend line without a structural break.
- Data note: Download speed is the fixed band average download speed. Sources include Amaglobeli and others (2023); Ericsson; GSMA Intelligence; International Telecommunications Union; Ookla; and Statista.

### Digital divide within and across countries
- Mobile ownership is significantly lower for women and for the elderly across all country income groups.
- Gender gaps (low-income developing countries example):
  - Less-than-primary-educated women are 10 percent less likely to own a mobile phone than men with comparable education.
  - Women with tertiary education are 1.2 percent less likely to own a mobile phone than less-than-primary-educated men.
- Age gaps:
  - The elderly (those over age 65) are less likely to own mobile phones than teenagers (those younger than age 20), even after controlling for gender, education, and income.
- Mobile phone ownership is positively and significantly associated with internet-based activities:
  - Mobile phone owners in low-income developing countries are 34 percent more likely than the national average to pay bills online.
  - Mobile phone owners in low-income developing countries are approximately 40 percent more likely than the national average to shop and bank online or receive government transfers using a phone.

### Drivers of digital adoption (affordability, literacy, infrastructure)
- Aggregate global digital infrastructure investment needs to provide universal broadband connectivity (SDG 9.c) are estimated at $418 billion.
  - This estimate assumes providing universal 4G cellular broadband to users with approximately 40–50 gigabytes of monthly data.
  - Emerging market economies: $305 billion, or 0.7 percent of GDP.
  - Low-income developing countries: $102 billion, or about 3.5 percent of GDP.
  - Geographic needs (percent of GDP):
    - Sub-Saharan Africa: 4.5 percent of GDP.
    - Middle East, North Africa, and Pakistan: 1.7 percent of GDP.
    - Caucasus and Central Asia: 1.6 percent of GDP.
    - Latin America and the Caribbean: 1 percent of GDP.
- Composition of required investments in low-income developing countries includes digital infrastructure capital expenditure, metro and backbone fiber, and infrastructure operational expenditure.
- Mobile-broadband basket prices:
  - Nominal prices for a data-only mobile-broadband basket have dropped by more than half since 2015 to less than $5 a month in 2021 in emerging market economies and low-income developing countries.
  - Relative to per capita income, the average mobile-broadband-basket price in 2020 was nine times higher in low-income developing countries than in advanced economies.
- Demand elasticity:
  - Demand for internet is most price responsive in low-income developing countries and almost unresponsive in advanced economies.
- Other barriers:
  - Poorer, less-educated communities may mistrust or not know how to use key technologies or may lack proof of identity to access online secured services.
  - Digital infrastructure coverage, internet price, and usability (for example, availability of applications in local languages) are the most statistically robust short-term predictors of internet use.

### Policy implications and practices
- Fiscal policy can help achieve faster digital adoption via supply- and demand-side interventions:
  - Supply-side: reduce high entry costs for providers; public spending to support digital inclusion in remote and rural areas.
  - Demand-side: targeted price discounts for devices or subscription fees; discount vouchers to consumers.
  - Complementarity: demand-side incentives can catalyze private investment; the positive effect of demand-side policies increases with broadband market development, while supply-side policies may be more effective at initial development stages.
- Public programs to improve affordability and quality:
  - Programs commonly focus on making internet cheaper (concessions, grants, discount vouchers) and improving service quality (download/upload speed).
  - Example cited: US Affordable Connectivity Program (monthly discounts for eligible households and infrastructure development toward expanding high-speed broadband).
  - Cross-country studies show public programs can be cost-efficient to expand coverage and pay off through higher growth.

### Contextual notes and country example
- India launched the “Digital India” campaign in 2015 targeting faster and more inclusive economic growth by pushing government and banking services online and investing in technology.
- Historical spike: in 2015–16, internet users per 100 people in the US grew from 74.5 to 85.5, contributing to a spike in internet coverage in advanced economies in 2016.
- Measurement note: Ookla Speedtest Intelligence® data provide aggregated measurements on internet performance collected through Speedtest®; see Amaglobeli and others (2023) for details.

*Source: sdnea2023004*

### 1.    Impact on Tax Revenue (Percent of

### sdnea2023004 - 1.    Impact on Tax Revenue (Percent of 

### A. Key empirical findings on GovTech and distributional effects
- Adoption of digital payments and e-procurement could increase the income shares of the bottom 50th percentile, and for women the most, in countries at the top quartile of GovTech maturity.
- Improvement in expenditure efficiency hinges on a mature GovTech enabling environment (for example, government officials with strong digital skills, the presence of data-driven platforms), ample digital network coverage, and high state capacity.
- Note on methodology: Bars show point estimates of each GovTech variable from fixed effects regressions, controlling for macroeconomic, structural, and institutional determinants of each outcome. Error bars present 95 percent confidence intervals. Digital payment is defined as electronic government transfers with internet or mobile phone. EFD = electronic fiscal device; EMDEs = emerging market and developing economies; FMIS = financial management information system; PIMS = public investment management system; TSA = treasury single account.

### B. Education: effects of internet and EdTech on learning outcomes
- An increase in internet use from 10 to 90 percent is associated with an increase in average primary and secondary education test scores by up to 25 percent.
- Moving from the first bin (0–20 percent) to the fifth bin (80–100 percent) improves the average test score by 29–45 points.
- With the average test score in the sample of 478 and the minimum of 300, the 45-point increase yields a 25 percent increase in test scores over the effective baseline average of 178 points.
- Estimation strategies: difference-in-differences with staggered treatment timing regressions (Internet Use discretized into five bins Q = (0–20%), (20–40%), (40–60%), (60–80%), (80–100%)) and the same specification with instrumented Internet Use (instrument = leave-one-out average of internet use at time t in the region of country c). PISA = Programme for International Student Assessment.
- Complementary channels and caveats:
  - EdTech and internet at home or at school affect students directly and indirectly (parents, educators).
  - Educational software increases computer skills especially for students without prior exposure.
  - Access to computers at home could reduce test scores (examples cited: Romania and North Carolina, United States) and academic effort (example: Peru).
  - Internet can be a distraction and a source of misinformation; parental controls and teacher training are important.
  - Distance learning can reduce rural-urban learning gaps and was advantageous when in-person classes were nonviable (COVID-19).

### C. Health: digital tools, records, telemedicine, and procurement
- Electronic health records:
  - In Estonia, an estimated 15–17 percent of prescriptions are changed when doctors receive warnings of drug interactions through the e-prescription system.
  - In Korea, in 2021, the government launched a mobile-phone-based public personal health record application integrating medication and vaccination data, linking to wearables and interoperating with hospital electronic medical records.
  - Governments should ensure collection and use of health care data are safe and well regulated.
- Telemedicine and digital services:
  - In Brazil, development of the e-SUS health care system integrator increased primary care units using digital records and devices.
  - In China, Ping An’s “Good Doctor” service had 315 million registered users by 2019 and includes an AI doctor that can answer patient questions and provide recommendations to doctors.
  - In Malawi, the African Drone and Data Academy educates students on drones to transport blood between clinics.
- Digital platforms for patent licensing and procurement:
  - Medicines Patent Pool builds a transparent drug patent database (MedsPaL) and shares licenses online.
  - The Global Fund’s Pooled Procurement Mechanism allows pooling orders, tracking order status, entering data directly, and improving reporting and monitoring.
  - Research finds pooled procurement institutions lower prices, valuable for small countries and concentrated drug markets, with reduced delivery delays—but at the cost of longer advance procurement planning.
- Disease surveillance:
  - Digital sources (social media, internet searches) facilitate outbreak identification and tracking.
  - Examples of digital disease surveillance tools: Integrated Disease Surveillance Project (IDSP) in India; Electronic Disease Early Warning System (eDEWS) in Yemen; similar systems in Ghana, Kenya, and Rwanda.

### D. Social safety nets: identification, coverage, and delivery mechanisms
- Digitalization can strengthen social safety nets via better identification, verification, and delivery mechanisms, improving spending efficiency and reducing leakages (including “ghost” beneficiaries and fraud).
- A cross-country analysis indicates GovTech indicators are positively associated with social safety net coverage.
- Example effect size: automation of budget payments using digital technologies could help with the expansion of the coverage of social assistance programs for the extremely poor by 7 percent.
- COVID-19 evidence:
  - Countries able to use digital databases and trusted data sharing to identify beneficiaries reached on average 50 percent of their population.
  - Countries that had to rely on collecting new information reached on average only 15 percent of their population.
  - In countries with existing social registries, integrated government databases, and stronger FMIS, expansion was faster and broader; in countries with limited capacity (Democratic Republic of the Congo and Togo), mobile phones were essential for registration and mobile money transfers.
- Typical delivery channels during COVID-19:
  - Digital payments used bank accounts or a combination of mobile money and bank accounts, except for social safety net countries which relied on mobile accounts.
  - Many countries had digital payments introduced prior to the pandemic; some (Angola, Cameroon, Liberia) used them for the first time during COVID-19.

### IV. Doing it right — Government strategy and implementation guidance
- A national digital strategy is essential; OECD framework (seven dimensions) emphasizes access, use, innovation, jobs, society, trust, market openness, and data governance.
- Four foundational elements for a national digital strategy:
  - Digitalize government services around users’ needs; adopt agile methodologies for faster delivery and adaptability.
  - Promote private sector participation to deliver responsible innovation, accounting for privacy and social, ethical, and environmental impacts.
  - Mitigate risks through legislation to protect privacy, cope with systemic risks, and invest in training of public officials. Note: 80 percent of all data breaches involve errors by an unsuspecting employee (Verizon 2022).
  - Focus on hard-to-reach households to address the digital divide and promote inclusion.
- Stages of digital transformation for fiscal operations:
  - Digitization: replicating manual processes in digital form.
  - Digitalization: process digital by default, with major steps automated (example: rules-based systems triggering authorizations).
  - Digital transformation: public finance processes digital by design (including business process reengineering) to produce new outputs or services and enhance citizen interaction.
  - Developing economies have an opportunity to leapfrog to advanced digital technologies (Estonia cited as a rapid progress example).
- Three interrelated pillars for digital public finance solutions:
  - Functional: how digital solutions support, automate, or redesign business processes.
  - IT architecture: underlying technology attributes, including cybersecurity.
  - Governance and management: legal and institutional aspects that support maximizing technology use.
  - All three pillars must be considered holistically.

*Source: STAFF DISCUSSION NOTES Transforming Public Finances through GovTech, INTERNATIONAL MONETARY FUND.*

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### sdnea2023004 - Annex III for an example of these attributes for public financial management functions). It is important to 

### IMF capacity development and implementation support
- IMF Capacity Development focuses on all three aspects of the implementation of GovTech solutions for public finance: strengthening institutional capacity, direct strategic and operational support, and knowledge dissemination (peer learning events, training, workshops).
- IMF publishes technical and operational notes to provide strategic advice and support capacity development.
- Collaboration with other providers includes organizing hackathons with local authorities, the private sector, and academia to develop quality and functional prototypes of GovTech solutions for national treasuries and revenue administrations.
- To ensure sustainability, IMF collaborates with development partners to support implementation of prototype solutions and, when feasible, develop them into open-source digital public goods.
- IMF supports rollout of financial management information systems in treasuries to ensure functional capabilities are exploited fully.
- In revenue administrations IMF staff support efforts to digitalize processes to:
  - improve operational efficiency;
  - reduce costs associated with revenue collection;
  - facilitate voluntary compliance;
  - improve taxpayer satisfaction.
- IMF supports strengthening data management and analytics because GovTech solutions generate massive amounts of data.

### Functional attributes and data as a strategic asset
- Digital solutions for fiscal operations typically include core and auxiliary IT systems and several IT support systems and should be designed following a set of common functional attributes.
- Integration of core PFM and revenue administration systems can be helpful (example cited: Georgia).
- Strengthening the feedback loop between PFM and expenditure policy using data from financial management information systems and other public sector IT systems would facilitate evidence-based fiscal decision-making.
- Capturing structured feedback from tax enforcement activities (for example, audit in tax administration, examination in customs) can dramatically improve effectiveness of revenue administration.
- Data examples:
  - Mozambique: data collected through the financial management information system allowed for detailed reporting of transactions, providing the foundation for data analysis.
  - Brazil: introduction of a digital accounting platform (SPED) enabled transformation of business processes within tax administration and across the business community; underlying data (invoices, bookkeeping, payroll records) reduced costs of compliance while dramatically increasing the volume of data captured.
  - Guatemala: introduction of electronic tracking devices on cargo trucks resulted in a reduction of the diversion of goods by 99 percent.
- Open data is critical to promoting innovation and value creation, often from external use of government data.
- Artificial intelligence (AI) initiatives could support data-driven decision-making:
  - Machine learning to forecast daily government Treasury shortfalls/surplus to support efficient cash planning.
  - Machine learning to identify high-risk Treasury payments to prevent irregular transactions.
  - Natural language processing “contract management” to identify fiscal risks from clauses in contracts by state-owned enterprises.
  - Robotic process automation to automatically generate payment orders from electronic invoices and automate validation and budgetary control; improves efficiency, reduces corruption risk, and generates timely, accurate fiscal information.
- Risks of AI include bias from training data sets and data privacy issues and should be carefully considered.

### Architectural principles and modular approaches
- IT architecture for digital solutions should be flexible, scalable, forward-looking, intuitive, secure, and maximize reusability of software components and data standards.
- Adopting a modular approach to implementing digital public finance initiatives is efficient. Replacing an entire financial management information system may not be optimal; updating or replacing core modules can be preferable (modular approach, Uña, Allen, and Botton 2019).
- Suitability of modular approach depends on analysis of costs and benefits and the level of coupling and cohesion in current IT systems.
- Since the mid-2000s, information systems on web-based platforms under service-oriented design have increased interoperability and ease of upgrades/maintenance under a modular approach.
- A government-wide strategy to invest efficiently in technology is a key priority to avoid duplication and inefficiencies from agency-specific digital infrastructure.
- Reusability encouraged through digital building blocks (digital solutions, applications, platforms, components) that can be reused across government or by other governments; promotes efficiency and cost savings (Alonso and others 2023).
- Examples of digital public infrastructure based on digital building blocks:
  - India Stack: three layers—unique identity (Aadhaar), payment system (for example, United Payments Interface), and data exchange (DigiLocker and Account Aggregator)—enables online, paperless, cashless, and privacy-respecting digital access to public and private services; fosters innovation and competition, improves financial inclusion, and boosts government revenue collection.
  - GovTech Stack of Singapore.

### Governance, legal frameworks, change management, and data protection
- Digital transformation of fiscal operations needs accompanying legal and institutional reforms:
  - Legal and regulatory frameworks should be reviewed and revised to promote innovation, transparency, interoperability, and to define norms and rules for data storage and preservation to support e-archiving.
  - Institutionalize digitalized processes and solutions in laws or regulations as appropriate.
  - Put in place institutional mechanisms for coordination because digitalization requires collaboration at many levels.
  - Review, update, and streamline traditional procurement laws and regulations to better address unique challenges of digital technology.
- Project and change management essentials:
  - Properly designed and executed project underpinned by a change management strategy is vital for successful implementation and sustainability.
  - Project management should include a well-designed plan linked to broader government IT strategy and a capable team to enable agility, iteration, experimentation, and continuous improvement.
  - Project procurement should avoid delays, cancellations, and vendor lock-in.
  - Project teams should include officials from both the business area and IT department.
  - Digitalization extends beyond automating processes to a cultural and mindset shift requiring robust change management and communication.
  - Change management requires leadership support and must consider internal operations, personnel, external stakeholders, new skills and job profiles (for example, IT professionals and data specialists), and jobs/skills that will become obsolete.
  - Developing and implementing a training and communication plan should be a key component of change management (example: Maldives ensured early training and public awareness programs during financial management information system implementation).
- Data protection and cybersecurity:
  - Protection of government-acquired or -used data is crucial for privacy, security, and citizen trust; data breaches can have severe financial consequences.
  - IBM estimates that the average cost of a data breach around the world in 2022 was $4.35 million per incident, and 83 percent of organizations have experienced more than one data breach.
  - The cost of a data breach in the government sector can be even more devastating, potentially leading to national security threats and jeopardizing trust between government and citizens.
  - Comprehensive data protection legislation is still lacking in many countries, placing privacy and other digital rights at risk.
  - Data protection legislation needs to balance protecting citizens’ rights and fostering innovation; a robust data protection framework should:
    - protect citizens’ privacy;
    - prevent companies and governments from indiscriminately collecting data;
    - hold companies and governments accountable for data breaches;
    - incentivize appropriate data handling and adequate investment in cybersecurity.

### Conclusions and policy implications
- Digitalization is transforming public finances and, if done well, can yield large social dividends by facilitating better access to basic public services and improving education, health outcomes, and effectiveness and efficiency of social safety nets.
- Governments have an important role in facilitating digital adoption in the economy and in public finance through supply- and demand-side policies.
- Implementation of digital solutions in fiscal operations can yield significant dividends by increasing revenue collection, strengthening transparency of public finances, and improving spending efficiency.
- Successful implementation requires embedding government programs in national digital strategies; IMF supports governments through capacity development and training.
- Digitalization generates the need and opportunity to redesign fiscal policies:
  - Digitalization may present new opportunities for tax evasion (for example, through the use of cryptocurrencies); policies should be adapted to minimize risks for tax collection.
  - Availability of more extensive and reliable information enables governments to reform tax systems to be more equitable and efficient:
    - increased availability of third-party information on (offshore) assets enables enhanced taxation of capital income;
    - linking transaction information (for example, through blockchain access) to personal income information can enable design of a progressive value-added tax.
  - On spending, the same or better income redistribution can be achieved by tightening eligibility requirements for recipients of social assistance.
- Digitalization is not a substitute for good governance:
  - Benefits of digital solutions materialize only when accompanied by efforts to strengthen institutions.
  - Digitalization may require regulatory changes, strong safeguards for data security and privacy, and adequate institutional capacity; weak capacity and inadequate safeguards can facilitate corruption and produce worse outcomes.
  - Complementary digital literacy training is essential for smooth implementation and effective use of new technology capabilities.
  - Adequate infrastructure (hardware platforms and internet connectivity) is necessary to effectively implement digital solutions.

*Source: STAFF DISCUSSION NOTES Transforming Public Finances through GovTech, INTERNATIONAL MONETARY FUND*

### Annex I. Glossary of Key Terms

### Annex I. Glossary of Key Terms

### Connectivity and Network Technologies
- 5G  
  The fifth generation of cellular technology, succeeding 4g, 3g, and 2g (GSM—Global System for Mobile Communications) systems. It is designed to increase speed, reduce latency, and improve flexibility of wireless services. It is estimated that 5g will cover one-third of the world’s population by 2025, mostly in advanced economies.

- Universal broadband connectivity  
  A theoretical concept that aims for all people, regardless of geographic location, socioeconomic status, race, gender, or any other differentiating demographic characteristic, to have access to affordable services and devices so that they can connect to reliable and safe internet; participate in the digital economy; access education, health care services, and so forth; and connect with others.

- Mobile phone penetration  
  A way of measuring the number of active mobile phone users in a particular country. It is usually expressed as the ratio of SIM cards to the total population and does not consider double counting when a person has more than one SIM card.

### Digital Infrastructure and Platforms
- Digital platform  
  Typically, a central hub for various services, providing citizens with a single access point to multiple services, such as applying for licenses, paying taxes, or accessing health care services. In GovTech, digital platforms enable governments to deliver services more efficiently, reduce administrative costs, improve citizen engagement, and promote transparency and accountability.

- Digital public infrastructure (DPI)  
  Solutions that enable the effective provision of essential society-wide functions and services in the public and private sectors, including digital forms of identification, payments, and data exchange.

- Digital building blocks  
  Applications, platforms, and systems that can be reusable across different government areas and can serve as a component to build larger systems or a technological stack, avoiding starting the process of developing digital solutions from scratch several times. These types of applications and platforms are generally developed on open-source software, and they accomplish basic but widely useful functions, such as digital identification. Digital building blocks have four main characteristics as a technological solution: autonomy, generic capabilities, interoperability, and evolvability.

- Digital tools  
  Programs, websites, applications, and other internet and computerized resources that facilitate, enhance, and execute digital processes and overall digitalization efforts.

- Data architecture  
  The rules, policies, and process of managing data from collection through to transformation, distribution, and consumption. It sets the blueprint for data and the way it flows through data storage systems. It is foundational to data processing operations and artificial intelligence (AI) applications.

- Integrated government databases  
  Digital government databases that contain unified data on citizens collected from different sources. Integrated government databases are important for governments pursuing digital transformation strategies to improve operations and organization of services such as e-government services.

- Interoperability  
  The ability of different functional units, for example, systems, databases, devices, or applications to communicate, execute programs, or exchange data seamlessly and effectively in a manner that does not require the user to have extensive knowledge of those functional units.

### Data, Analytics, and AI
- Big Data  
  Large and complex data sets that can include structured, semistructured, and unstructured data from various sources, such as social media, sensors, and survey responses. It allows organizations to uncover hidden patterns, previously unknown correlations, and customer preferences to gain insight into customer behavior, optimize business operations, improve decision-making, and develop new products and services.

- Artificial intelligence (AI)  
  The rapidly evolving field of computer science that focuses on the development of intelligent machines that can reason, learn, and act in ways that simulate human intelligence, such as recognizing speech, understanding natural language, making decisions, and recognizing patterns in data. It can help businesses automate processes, reduce costs, and improve efficiency and decision-making.

- Machine learning  
  The part of artificial intelligence (AI) studying how computer agents can improve their perception, knowledge, thinking, or actions based on experience or data. It involves the development of algorithms and models that can learn patterns and insights from data and make predictions or decisions based on that learning. Machine learning can be used in various applications, such as image recognition, speech recognition, natural language processing, and predictive analytics.

- Big Data (entry repeated in source)  
  Large and complex data sets that can include structured, semistructured, and unstructured data from various sources, such as social media, sensors, and survey responses. It allows organizations to uncover hidden patterns, previously unknown correlations, and customer preferences to gain insight into customer behavior, optimize business operations, improve decision-making, and develop new products and services.

### Digital Identity, Payments, and Financial Technologies
- Digital identification (ID)  
  An electronic representation of personally identifying information that may be used to authenticate people’s identity and grant them access to various digital services.

- Digital payments/e-transactions/e-payments  
  A broad term including any payment executed electronically. Includes payments that are initiated by mobile phone or computer.

- Mobile money  
  Financial transactions and services that can be carried out using a mobile device such as a mobile phone or tablet. These services may or may not be linked directly to a bank account.

- Fintech  
  Software, mobile applications, and other technologies created to improve and automate traditional forms of finance for businesses and consumers alike. Fintech can include everything from straightforward mobile payment apps to complex blockchain networks housing encrypted transactions.

- Blockchain  
  An advanced database mechanism that allows transparent information sharing within a network. A blockchain database stores data in blocks that are linked together in a chain, in a manner that prevents tampering. As a result, some projects use blockchain technology to create an unalterable or immutable ledger for tracking orders, payments, accounts, and other transactions. Blockchain, in itself, is only a storage mechanism with a distributed governance.

- Electronic fiscal device (EFD)  
  A type of technological device revenue administrations can use to help monitor business transactions. Advanced EFDs are capable of transmitting fiscal data directly to the servers of tax administration organizations.

- e-Invoicing  
  The exchange between a supplier and a buyer of an invoice issued, sent, and received in a structured data format that allows for its automatic and electronic processing. Because the process is machine-readable, it can seamlessly integrate into the purchaser's accounts without manual data entry.

### Government Digital Transformation and Services
- GovTech  
  The use of technology to modernize and transform government operations, decision-making processes, and service delivery to improve government services, transparency, efficiency, agility with fit-to-purpose technology, and citizen engagement. This includes developing digital tools and platforms, using data analytics and innovative technologies such as cloud computing and artificial intelligence, and promoting transparency and accountability and public and private sector collaboration. GovTech is increasingly important as citizens expect more user-friendly and trusted services and governments seek to address complex societal challenges.

- e-Government  
  The use of information and communication technologies (ICT) to transform government operations by making government services more accessible, effective, and accountable.

- National digital strategy (NDS)  
  The policy foundation toward building an innovative, open, agile, and inclusive digital government. An NDS (1) encompass a “whole-of-government” digitalization approach, which therefore encourages ministries of finance to further digitalize their public financial management and revenue administration operations; (2) fosters a coherent approach to digitalize government services and strengthen digital public infrastructure, with citizens and businesses at the core of such transformations; and (3) coordinates cross-cutting digital policies (for example, cloud strategies, data privacy, cybersecurity, and so forth).

- Digitalization  
  The ongoing integration of digital technologies and digitized data across the economy and society.

- Digital divide  
  A gap between people who have access to digital technologies or services, such as the internet, and those who do not. Those without access may lack essential computer skills or access to information that could be beneficial for them to participate in digital economic activities such as education, health care, agriculture, etc.

- Digital learning  
  Any instructional practice that effectively uses technology to strengthen a student’s learning experience and encompasses a wide spectrum of tools and practices.

- Telemedicine  
  The use of telecommunications or digital technologies to support the delivery of medical, diagnostic, and treatment-related services, usually by doctors who are not located in the same place as the patient.

- e-Prescription  
  A prescription health care providers can prescribe to patients digitally and transmit to pharmacies using special software programs and internet connectivity. E-prescription is a more convenient and cheaper form of prescription for doctors, pharmacies, and patients.

- e-Filing  
  The process of electronically submitting tax returns and other related documents to the government. E-filing is more convenient and efficient and can reduce time of administrative or information processes.

- e-Procurement  
  The use of electronic and communication technologies in procurement processes to increase efficiency, improve cycle times, reduce costs, and facilitate greater control and visibility in the procurement process.

- Digital identification (entry repeated in source)  
  An electronic representation of personally identifying information that may be used to authenticate people’s identity and grant them access to various digital services.

### Security, Governance, and Standards
- Cybersecurity  
  A set of practices, technologies, and processes designed to protect digital assets such as computer systems, networks, and data from unauthorized access, modification, theft, damage, denial of service, or other malicious activities. Its primary objective is to guarantee the confidentiality, integrity, and availability of data and information systems.

- Information systems security  
  The protection of information systems against unauthorized access to or modification of information, whether in storage, processing, or transit and against the denial of service to authorized users, including measures necessary to detect, document, and counter such threats.

- Data governance  
  A set of processes that ensures that data assets are formally managed throughout an organization. A data governance model establishes authority and management and decision-making parameters related to the data produced or managed by the organization.

- Data loss  
  Unintentional or accidental loss of data that is in digital or physical form. This can happen due to a variety of reasons, such as data theft or destruction, failure or malfunction of hardware or software storing the data, human error, or malicious attack.

- Open-access code  
  Universal and free access to code that is used to create digital systems/platforms/tools and unrestricted use of the code at no cost and free of most copyright and licensing restrictions.

- RegTech  
  The use of technology to enhance risk management and regulatory compliance in financial institutions.

- SupTech  
  The use of innovative technology by supervisory agencies to support supervision. It helps supervisory agencies digitize reporting and regulatory processes, resulting in more efficient and proactive monitoring of risk and compliance at financial institutions.

### Automation, Efficiency, and Usability
- Automation  
  Integration of processes and tasks so that they run autonomously and automatically. Automation is the part of digitalization that automates processes with minimum human involvement. Automation can directly impact the labor market and potentially increase redundancy of employees in the public sector; digitalization does not necessarily have this effect.

- Digital resilience  
  Planning for digital risks or disruptions and building capabilities to detect and respond, recover, and thrive even after the disruption.

- Digital inclusion / Usability concepts (covered across definitions)  
  Definitions above that relate to training, usability, and inclusion include: Digital learning; Digital divide; Digital tools; Digital building blocks; Digital public infrastructure (DPI); Digital identification (ID); and related GovTech and e-Government entries.

*Source: Annex I. Glossary of Key Terms, sdnea2023004*

### Annex III. Detailed Attributes for Public Financial

### Annex III. Detailed Attributes for Public Financial Management (PFM) Functions under Functional, IT Architectural, and Governance Pillars

### Pillar I. Core Functional Attributes
- Process Transformation
  - PFM digital solutions should streamline processes, eliminating unnecessary steps and reducing the need for manual intervention.
  - Solutions should automatically apply PFM business rules for control and compliance based on the legal framework, enhancing efficiency, effectiveness, and traceability, and aiding detection of potential deviations from targets and financial mismanagement.
- Data Capture
  - PFM IT systems should (i) support gathering and consolidating timely, comprehensive, and reliable data that are generated along the PFM cycle and/or required from specified outside sources to support PFM functions; and (ii) enable automating data gathering and data consolidation across the general government.
- Data architecture and interoperability
  - Data architecture should allow agile and secure exchange of data internally and externally and avoid disconnected databases or siloed systems.
  - Interoperability should be maintained through a clear and effective data governance program—including shared taxonomy codes, catalogues, and classifications.
- Data storage
  - PFM IT systems should allow storing data for historical data analysis, allow public access to information, and ensure data integrity.
- Information for decision-making
  - PFM IT systems should provide information useful for decision-making across technical day-to-day operations, managerial decision-making, and oversight roles such as auditing.
- Information transparency
  - PFM IT systems should support user-centered transparency by enabling publication of clear, reliable, frequent, timely, relevant, comprehensive, and accessible open data.

### Pillar II. Core IT Architectural Attributes
- Adaptive
  - The IT strategy should account for the ever-changing nature of technology, business needs, trends, and emerging risks.
- Anticipatory
  - Implementation and modernization of PFM systems should be designed in a forward-looking manner, prioritizing adoption of new technologies before converting legacy systems, accompanied by a cost-effectiveness and sustainability analysis.
- Pragmatic
  - Data collection should be comprehensive and granular at one entry point, avoiding duplication and promoting data accessibility, usability, reliability, and security.
- Secure
  - PFM IT systems should be designed to meet security and privacy requirements. Embedded security and data privacy controls should guarantee that solutions and processed, in-transit, or stored data are adequately protected, reliable, and can be trusted. Systems, processes, and practices should be resilient to adapt to the evolving cyber threat landscape.
- User-centered
  - Digital solutions should be intuitive and adapted to needs of different user roles, with access models and modes, including multichannel use, to provide flexibility for data analysis, ensure traceability and auditing, generate automated reporting, and provide advanced data analytics and raw data export.
- Open Architecture
  - Digital solutions architecture should maximize reusability of components and data between public institutions and other relevant stakeholders.

### Pillar III. Core Governance and Management Attributes
- Legal framework
  - The legal and regulatory frameworks should support modernization of PFM functions with digital tools; where appropriate, laws and regulations should be clarified and updated to enable innovation, promote transparency, and prioritize interoperability.
- Strategic vision
  - Organizational culture should recognize the value of innovation and foster an enabling environment for comprehensive digitalization reforms.
- Project management
  - There should be a well-designed plan and a well-functioning team to address practical and operational issues during design, procurement, and implementation processes along the PFM IT system project cycle.
- Data governance
  - Policies, procedures, and mechanisms should ensure proper management and quality of data throughout its life cycle.
- Data protection
  - Data collected should be handled responsibly, with consideration for its ethical use and respect for privacy rights.
- Risk management
  - Threats to digital solutions and related data—from systems outages to data breaches and other cybersecurity risks—should be recognized, controlled for, and mitigated up front; this principle covers the management component of cybersecurity.

### Annex IV. Categories of IT Systems for PFM and Revenue Administration (RA)
- Core systems
  - Systems that help automate core fiscal operational tasks and related business processes (examples: financial management information systems (FMIS), integrated tax administration systems (ITAS), core customs processing systems).
- Auxiliary systems
  - Systems that help process auxiliary tasks whose output generally feeds into core systems (examples: e-invoicing, e-filing, e-payment, e-procurement, payroll, single window, user-facing systems with historical transactional information).
- Supporting systems
  - Systems such as human resource information management systems (HRIMS), document management, case management, quality assurance, enterprise risk, information security systems, intranet, enterprise reporting, and data analytics.

### Annex V. Managing Digital Risks

- Overview
  - Proper design and implementation of reliable and resilient digital services are core to effective and efficient public finance transformation.
  - Heavy reliance on digital services can introduce digital risks such as single points of failure across technology, processes, or people; risks include cyber-attacks, digital fraud, human mistakes, outages, and widening the digital divide.
  - Building digital resilience involves planning and preparing for resilience, and adapting during and after disruptions by responding, recovering, and thriving.

- Planning and preparing for digital resilience — illustrative risks and considerations
  1. Privacy risks and distrust of personal data protection can be a barrier to adoption of new digital solutions; protection of personal data is an essential element of a digital risk strategy. Digital government efforts should be clearly rooted in and compliant with national data protection regulation to promote trust and user confidence.
  2. Vulnerabilities can be exploited at any level of the digital public infrastructure (DPI) and beyond; new digital solutions should be deployed and tested in the context of the supporting ecosystem. Public finance institutions should identify elements of their technology stack that should be classified as critical national infrastructure (CNI) and protected accordingly.
  3. Emerging technologies offer opportunities but introduce hard-to-identify risks; proper adoption requires experts, including cybersecurity professionals, and resources not always available in low- and middle-income countries. Responsible and safe innovation can be facilitated with strong public–private partnerships and progressive regulation (for example, regulatory sandboxes).
  4. Cybercrimes and online fraud that involve human elements contribute to 80 percent of all data breaches. A strong cyber awareness program supported by regular mandatory training for all staff is a critical element of public finance risk management.
  5. Cybercriminal activities as a result of political and geopolitical relationships have far-reaching consequences; mission-critical systems, applications, and services online are prime targets for national- or state-sponsored cyberattackers. Example: in Costa Rica, customs administration systems were crippled by a ransomware attack, disrupting business operations and access to paychecks, medical records, and COVID-19 tracking for more than two months.
  6. Inadequate procurement of digital solutions can contribute to failure of IT projects; procurement should be supported by a modern, well-informed, and agile procurement team.
  7. Gaps in implementation—such as inadequate data governance frameworks—may affect interoperability, data quality, and accuracy; digital ID authentication mechanisms are nascent in many low- and middle-income countries and rollouts can be slow, with the poor, rural populations, the elderly, and people with disabilities struggling most.
  8. The digital divide and digital exclusion can hinder portions of the community from using digital technologies. Example statistics: 1.1 billion people lack access to electricity and 2.9 billion people, 96 percent of whom live in developing economies, have no access to the internet.

- Adapting during and after disruption — strategic responses
  1. Ensuring availability and continuity of public services and delivery
     - Digital resilience includes planning for business disruption or disaster and building capabilities to detect, respond, recover, and thrive after disruption.
     - Public institutions should identify key digital assets (for example, critical payment systems and national ID systems) that foster social and economic activities and classify them as part of the country’s critical infrastructure services, and identify and protect against potential threats.
  2. Management of cybersecurity incidents and other (cyber) criminal activities
     - Requires coordinated trainings and awareness at different levels and mechanisms at strategic, operational, and ad hoc levels to prevent, detect, respond to, and recover from cyberattacks.
     - Users need regular training to recognize suspicious activities and report security incidents.
     - Stricter laws should be in place and enforced to combat cybercriminal activities and fraud.
     - National community emergency response teams, sectoral, and institutional security operations center capabilities can be tapped to monitor networks and detect and respond to cyberattacks.
     - Policies and incentives (for universities and the private sector) are needed to produce and retain cybersecurity talent, which is scarce globally.

*Source: sdnea2023004 - Annex III. Detailed Attributes for Public Financial Management (PFM) Functions under Functional, IT Architectural, and Governance Pillars*

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### Health, Digital Health Systems, and Health Information
- CETIC.BR. 2021. “Executive Summary, ICT in Health 2021.” COVID-19 Edition—Adapted Methodology. Regional Center for Studies on the Development of the Information Society, São Paulo.
- Holst, Christine, Felix Sukums, Danica Radovanovic, Bernard Ngowi, Josef Noll, and Andrea Winkler. 2020. “Sub-Saharan Africa—The New Breeding Ground for Global Digital Health.” Lancet Digital Health 2 (4).
- Lee, Jae-Ho. 2022. “Era of Personal Health Records in Korea.” Healthcare Informatics Research 28 (1): 1–2.
- Mamuye, Adane L., Tesfahun M. Yilma, Ahmad Abdulwahab, Sean Broomhead, Phumzule Zondo, Mercy Kyeng, Justin Maeda, Mohammed Abdulaziz, Tadesse Wuhib, and Binyam C. Tilahun. 2022. “Health Information Exchange Policy and Standards for Digital Health Systems in Africa: A Systematic Review." PLOS Digital Health 1 (10): e0000118.
- Wang, Lucy Xiaolu, and Carolina Bloch. Forthcoming. “Digital Interventions in The Health Sector: Country Cases and Policy Discussions.” IMF Notes, International Monetary Fund, Washington, DC.
- Wang, Lucy Xiaolu, and Nahim Zahur. 2022. “Procurement Institutions and Essential Drug Supply in Low and Middle-Income Countries.”

### Digital Tools, Big Data, and Information Integrity
- Bansal, Shweta, Gerardo Chowell, Lone Simonsen, Alessandro Vespignani, and Cécile Viboud. 2016. “Big Data for Infectious Disease Surveillance and Modeling.” Journal of Infectious Diseases 214 (suppl_4): S375–S379.
- Goldfarb, Avi, and Catherine Tucker. 2019. “Digital Economics.” Journal of Economic Literature 57 (1): 3–43.
- Lazer, David M., Matthew A. Baum, Yochai Benkler, Adam J. Berinsky, Kelly M. Greenhill, Filippo Menczer, Miriam J. Metzger, Brendan Nyhan, Gordon Pennycook, David Rothschild, Michael Schudson, Steven A. Sloman, Cass R. Sunstein, Emily A. Thorson, Duncan J. Watts, and Jonathan l. Zittrain. 2018. “The Science of Fake News.” Science 359 (6380): 1094–96.
- Verizon. 2022. “Data Breach Investigations Report.” New York.

### Communications, School-Home Interaction, and Reading
- Goodall, Janet S. 2016. “Technology and School-Home Communication.” International Journal of Pedagogies and Learning 11 (2): 118–31.
- Heath, Don, Rozan Maghrabi, and Nora Carr. 2015. “Implications of Information and Communication Technologies (ICT) for School-Home Communication.” Journal of Information Technology Education 14.
- Derksen, Laura, Catherine Michaud-Leclerc, and Pedro C. Souza. 2022. “Restricted Access: How the Internet Can Be Used to Promote Reading and Learning.” Journal of Development Economics 155: 102810.

### Methodology, Frameworks, and Reviews
- Dener, Cem, Hubert Nii-Aponsah, Love Ghunney, and Kimberly Johns. 2021. “GovTech Maturity Index: The State of Public Sector Digital Transformation.” International Development in Focus, vol. 2, World Bank, Washington, DC.
- OECD. 2019. “The Path to Becoming a Data-Driven Public Sector.” OECD Digital Government Studies, Paris.
- OECD. 2022. “OECD Handbook on Competition Policy in the Digital Age.” Paris.
- Pont, Beatriz, Deborah Nusche, and Hunter Moorman. 2008. Improving School Leadership, Volume 1: Policy and Practice. Paris: Organisation for Economic Co-operation and Development.
- Fritz, Verena, Marinus Verhoeven, and Ambra Avenia. 2017. “Political Economy of Public Financial Management: Experiences and Implications for Dialogue and Operational Engagement.” World Bank, Washington, DC.
- Pimenta, Carlos, and Antonio Seco. 2021. “Financial Management Information Systems—Project Guide.” Inter-American Development Bank, Washington, DC.

### IMF Staff Papers, Notes, and Related Working Papers (selected)
- Jaumotte, Florence, Longji Li, Andrea Medici, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Jiaming Soh, and Marina M. Tavares. 2023. “Digitalization during the COVID-19 Crisis: Implications for Productivity and Labor Markets in Advanced Economies.” IMF Staff Discussion Note SDN2023/003, International Monetary Fund, Washington, DC.
- Davidovic, Sonja, Soheib Nunhuck, Delphine Prady, and Hervé Tourpe. 2020. “Beyond the COVID-19 Crisis: A Framework for Sustainable Government-to-Person Mobile Money Transfers.” IMF Working Paper 2020/198, International Monetary Fund, Washington, DC.
- Kumar, Utkarsh, David Amaglobeli, and Mariano Moszoro. 2023. “Determinants and Social Dividends of Digital Adoption.” IMF Working Paper 2023/065, International Monetary Fund, Washington, DC.
- Michaud-Leclerc, Catherine, and Mariano Moszoro. 2023. “The Impact of Digitalization on Education: What We Know and Policy Recommendations.” IMF Notes, International Monetary Fund, Washington, DC.
- Silve, Arthur, and Mariano Moszoro. Forthcoming. 2023. “The Political Economy of GovTech.” IMF Notes 2023/003, International Monetary Fund, Washington, DC.
- Uña, Gerardo, Richard Allen, and Nicolas Botton. 2019. “How to Design a Financial Management Information System: A Modular Approach.” IMF How to Note 19/02, International Monetary Fund, Washington, DC.
- Garcia-Escribano, Mercedes, Pedro Juarros, and Tewodaj Mogues. 2022. “Patterns and Drivers of Health Spending Efficiency.” IMF Working Paper 2022/048, International Monetary Fund, Washington, DC.
- Amaglobeli, David, Mengfei Gu, Mariano Moszoro, Yue Zhou, and Patricia L. Escalante. 2023. “Internet Adoption Trends during COVID-19.” IMF Notes 2023/001, International Monetary Fund, Washington, DC.

*Transforming Public Finance through GovTech Staff Discussion Note No. SDN/2023/004*

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_Source: https://www.imf.org/-/media/files/publications/sdn/2023/english/sdnea2023004.pdf_