Guinea-Bissau is leveraging blockchain technology to improve fiscal transparency in managing its public sector wage bill. Launched in May 2024, this initiative, developed in collaboration with the IMF and Ernst & Young, enables real-time tracking of salaries and pensions. The platform aims to enhance governance and public trust while reducing the proportion of tax revenues directed towards salaries, from 84 percent to 50 percent, which remains above the recommended level. Looking forward, the project plans to scale to additional ministries, promoting accountability and efficiency in public financial management.
Guinea-Bissau, a small West African nation, has made significant strides toward enhancing fiscal transparency by adopting blockchain technology to manage the public sector wage bill. In May 2024, the country launched an innovative blockchain platform as part of its program with the International Monetary Fund (IMF) under the Extended Credit Facility (ECF). This initiative, developed in partnership with Ernst & Young over four years, represents one of the pioneering efforts in Africa to improve government operations through advanced technology. The new blockchain platform offers a secure digital ledger designed for tracking and managing wage data within the public sector, allowing for real-time monitoring of salary and pension eligibility, budgeting, and disbursements. With its tamper-evident system, the platform ensures data integrity and facilitates the creation of accurate fiscal reports for policymakers and the public. This technological advancement aims not only to streamline governmental operations but also to elevate levels of governance and accountability. During an interview with the IMF, José Gijón, the Guinea-Bissau mission chief, emphasized the importance of this program, noting that when it commenced in 2020, the wage bill represented an astonishing 84 percent of total tax revenues. This heavy burden has since been reduced to 50 percent, although it remains higher than the West Africa Economic and Monetary Union’s (WAEMU) recommended threshold of 35 percent. The implementation of the blockchain solution is expected to enhance fiscal transparency by mitigating perceptions of public corruption and improving the efficiency of salary management and payment processes. As the project progresses, the blockchain team plans to expand its capabilities to encompass additional ministries, with expectations of tracking wage data for all public officials and pensioners by November 2024. The overarching goal of this initiative is to ensure that employment and wage bill payments for public officials adhere strictly to legal and regulatory frameworks, thereby bolstering governance and contributing to sustainable economic development in Guinea-Bissau. This endeavor underscores Guinea-Bissau’s determination to address governance challenges and signifies a collaborative effort to utilize technology for a brighter future.
Guinea-Bissau, a nation located along the coast of West Africa, has struggled with governance and fiscal management, particularly concerning its public sector wage bill, which historically consumed an unsustainable portion of tax revenues. In an effort to improve fiscal health and transparency, the country, in collaboration with the IMF and technological advisor Ernst & Young, has embarked on the implementation of blockchain technology to enhance accountability in its governance practices. This initiative marks a significant step for both Guinea-Bissau and the broader African continent, showcasing how advanced technology can revolutionize public sector management and bolster economic stability.
In conclusion, Guinea-Bissau’s adoption of blockchain technology for managing its public sector wage bill signifies an innovative approach to improving fiscal transparency and governance. By effectively utilizing a secure and transparent digital platform, the country has set a precedent for enhancing public service delivery while addressing previous challenges regarding fiscal management. As the project continues to expand, it holds great promise for further building trust in financial institutions and ensuring compliance with regulations, ultimately fostering a sustainable economic development environment.
Original Source: www.imf.org
