Guinea-Bissau Leverages Blockchain Technology to Enhance Fiscal Transparency

In May 2024, Guinea-Bissau launched a pioneering blockchain platform as part of its collaboration with the IMF to enhance public sector wage management. This technology enables real-time monitoring of salary and pension data, improves data integrity, and reduces discrepancies. The initiative is aimed at increasing fiscal transparency, accountability, and trust among citizens, with plans for further expansion across various government ministries.

Guinea-Bissau, a West African nation, is leveraging blockchain technology to enhance fiscal transparency within its public sector. In May 2024, the government launched a blockchain platform aimed at refining its management of public wage bills. This initiative, facilitated by collaboration with the International Monetary Fund (IMF) and the technical expertise of Ernst & Young over a four-year period, marks a pioneering move in Sub-Saharan Africa towards improved governance and fiscal management. The new blockchain platform provides a secure, transparent digital ledger that allows for near real-time monitoring of salaries and pensions, facilitating essential functions such as budgeting, payment approvals, and disbursements. According to Concha Verdugo Yepes, the project lead, the system significantly enhances data accuracy and integrity, contributing to timely fiscal reporting. The blockchain operates by creating a virtual ledger that records transactions securely and unalterably, raising alerts for any inconsistencies in salary data. While the system does not currently integrate with artificial intelligence, the data collected paves the way for future predictive analysis, which may further improve decision-making. This digital innovation is poised to create significant benefits for the citizens of Guinea-Bissau and enhance the overall accountability of government finances. Under the IMF-supported program, which identifies potential discrepancies in budgeting, the country has already reduced its wage bill from 84% to 50% of tax revenues, although this figure remains above the regional standard of 35%. Looking forward, the blockchain initiative aims to expand across various ministries and agencies, potentially encompassing all public officials and pensioners within the upcoming months. This collective effort underscores a commitment to bolstering governance and ensuring that public officials are qualified and that payments are properly managed and monitored. Guinea-Bissau’s adoption of blockchain technology represents not only a technological leap but also a significant collective endeavor towards greater transparency, accountability, and trust in its public institutions.

The implementation of blockchain technology in Guinea-Bissau is part of a broader initiative to tackle governance and fiscal management issues that have long plagued the country’s economic stability. With the assistance of the IMF and technology partners, this transformation is critical for enhancing the integrity of public finance management, particularly concerning salary and pension systems. As one of the first countries in Sub-Saharan Africa to adopt such a digital solution, Guinea-Bissau’s experience serves as a model for other nations seeking to improve transparency and combat corruption.

Guinea-Bissau’s innovative use of blockchain technology signifies a pivotal move towards enhanced fiscal transparency and governance within the public sector. This initiative not only enhances the monitoring and management of public expenditures but also aims to build public trust through improved accountability. As authorities look to expand the platform’s reach, the nation’s commitment to a transparent and accountable government system is poised to foster sustainable economic growth and integrity in public financial management.

Original Source: www.imf.org