Integrated Financial Management Systems: Toward faster delivery of gov't services, enhanced accountability, transparency

BEYOND BUDGET

*Assalamu alaikum wa Rahmatullahi wa Barakatuh.* When I was given the honor to serve our country as budget secretary, I already knew my “why.” It was to make a positive difference and push for fiscal reforms through policies and action. Recently, I wrote about how an open government could truly boost our country’s agenda for growth by trickling down reforms to local government units (LGUs) for a more direct impact on the everyday lives of Filipinos. I did mention that the reforms involve pushing for digital transformation to strengthen public financial management in our LGUs. Through digital transformation, the government will be able to build reliable data systems that are responsive to the people’s needs which includes targeted social protection and more efficient employment opportunity linking systems. Last week was a cause for celebration as President Ferdinand R. Marcos Jr. signed Executive Order (EO) No. 29, directing the full adoption of the Integrated Financial Management Information System (IFMIS) in government agencies. Also last week, the World Bank sent technical consultants to assist the Department of Budget and Management (DBM) with data architecture. Further, just yesterday, the International Monetary Fund (IMF) technical assistance team led the mission launch for the IFMIS and the Progressive Budgeting for Better and Modernized (PBBM) Governance Bill. This week and next, IMF experts in public finance and IT shall visit the DBM. IFMIS is a consolidated platform of digitalization used in public financial management (PFM) processes, which starts with budget preparation, execution, accounting, auditing to reporting. The integrated system is linked with agencies and other public sector operations. The main system may also be integrated with other information systems such as payroll, pension, e-procurement, tax and customs collection, and other public transactions. It aims to instill fiscal discipline, speed up government transactions, promote on time delivery and implementation of services, as well as better planning of government spending priorities. According to a study published by the IMF in 2019, the development of financial management information systems (FMIS) started in the 1980s with in-house systems developed by ministries of finance or treasury departments to support their activities. Then, separate systems were typically developed to support functions such as accounting, budget execution, financial reporting, or cash management, with limited interfaces between the systems. Gradually, interfaces were developed to allow for a better exchange of data. Many advanced economies, developing countries and emerging markets have invested substantially in FMIS infrastructure and software, as they find it integral in ensuring their key macroeconomic and fiscal goals and objectives. This is believed to reduce their governance vulnerabilities, while keeping pace with technological advances in digitalization, data management, and cybersecurity. The scope may differ from government to government, but the ultimate objective of IFMIS is to advance equity and efficiency in government operations. But, what is the relevance of EO 29 to regular Filipinos? We all know that the government's many initiatives and projects rely heavily on the budget. Thus, a reliable, effective, and transparent budget system is necessary if we are to accomplish our nation's development objectives. With the complete deployment of the IFMIS, we may track the extent to which we have accomplished our programs and its objectives, as well as how efficiently the resources have been spent. Hence, we improve the quality of public spending. Hence, the PFM Committee, composed of the DBM, Department of Finance, the Commission of Audit, and Bureau of Treasury considers the signing of the EO as momentous in advancing transparency, good governance and accountability. I vividly remember — during our very first executive committee meeting at the DBM in July 2022, my first instruction was to embrace digitalization in the bureaucracy and push for the issuance of the proposed EO on strengthening the integration of public financial management information systems. President BBM’s signing of EO 29 manifests his sincere commitment to optimize digital transformation to achieve the government's 8-Point Socioeconomic Agenda. Indeed, we are lucky that the President is very supportive of our reforms. Under the EO, the PFM Committee is directed to reengineer PFM processes and IFMIS, and to issue guidelines on the transitional arrangements for compliance by concerned agencies until their full IFMIS adoption. The EO covers all national government agencies and government-owned or -controlled corporations. LGUs are also encouraged to adopt and implement the IFMIS. The full adoption signals the resumption of the Budget and Treasury Management System (BTMS), a key digitalization measure of the DBM, which will serve as a central database that enables real-time mapping of transactions from purchase to payment and enhance financial management. This means that transfer of financial information between government agencies can be made faster.  Imagine the amount of papers that can be saved, workload that can be eased, and processes that can be skipped, leading to more efficient transactions and delivery of services in and by the government. After all, BTMS is the core of an IFMIS. The DBM is set to roll out the IFMIS and BTMS before 2023 ends. This means we are a few steps closer to eradicating corruption and fostering bureaucratic efficiency. Beyond budget, a well-managed financial system is one vital key to our country’s development. Harnessing technology, efficient PFM, and quality citizen participation will further open fiscal transparency and encourage the people to engage and collaborate with the government. Undoubtedly, digital transformation is our way forward. Let us embrace it. Let us seize our future. *(Amenah F. Pangandaman is the current Secretary of the Department of Budget and Management.)*