Introduction: change and continuity in digital PFM

The 2026 report highlights a meta-trend of volatility and uncertainty in global public financial management (PFM). A significant shift is the dramatic reduction in official development assistance (ODA), with 11 member states of the Organisation for Economic Co-operation and Development (OECD) announcing aid reductions and the United States (US) slashing $4.9 billion from its budget in mid-2025. This has forced low-income countries (LICs) to focus more closely on domestic revenue mobilisation (DRM). Despite these challenges, the 2025 Gov Tech Maturity Index (GTMI) shows a slight increase in the adoption of digital systems, with financial management information systems (FMIS) existing in 185 economies.

Earth observation and the finance ministry information gap

Earth observation (EO) and artificial intelligence (AI) are constituting an independent evidence base within the PFM cycle. These technologies enable automated, repeated measurement of physical assets and land use at scale. Supreme audit institutions (SAIs) in India, Colombia, and Tanzania are leading the use of EO for performance audits related to coastal protection and deforestation. In India, the SAI presented findings on compliance along a coastline of more than 7,500km. However, uptake in core budgeting and spending review processes remains limited due to institutional constraints and information asymmetries.

The AI-augmented state: enforcing fiscal promises

The report proposes a layered architecture for a PFM-DPI-AI stack, where agentic AI systems reason, plan, and act through tools and data. Three archetypes of AI agents include citizen assistants, employee assistants, and administrator assistants. Currently, 57% of government AI deployment cases support automating or tailoring services. Potential applications include South Korea’s dBrain+ system, which integrates data across 63 institutional systems, and Brazil’s AI-driven expenditure reviews that help officials identify inefficiencies in large-scale programmes.

Digital public goods for digital government: considerations for PFM

Governments face choices between proprietary, custom, and digital public goods (DPGs). DPGs, which are open-source software meeting specific standards, have been implemented in various countries; for example, DHIS2 is used in over 70 countries, representing 30% of the global population. However, DPGs face financial sustainability risks due to their dependence on donor funding. The report notes that 44% of code maintainers cited burnout in 2024, and the rise of AI-generated code is disrupting existing open-source business models by reducing revenue from documentation and customisation.

Designing procurement information systems for improved access to public healthcare

In most lower-middle-income countries, medicine procurement does not align with supply chain logic, leading to stock-outs in 29% to 54% of surveyed facilities. In India, a comparison between the logistics-focused Tamil Nadu Medical Services Corporation (TNMSC) and the patient-focused anti-tuberculosis (TB) model highlights gaps in last-mile traceability. While the TNMSC model manages a vast inventory for 72 million residents, it lacks data on actual dispensing to patients, unlike the anti-TB model which tracks drugs down to individual patient IDs.

Better procurement for government IT systems

IT procurement faces an ‘incomplete contract’ problem due to rapid technological evolution. The report argues for a ‘staged’ approach combining ‘make’ and ‘buy’ strategies. India’s UIDAI project is cited as a success, creating a national ID for 0.8 billion people within five years through unbundled contracts and a dedicated agency. In contrast, the MCA-21 and Passport Seva projects highlighted frictions in long-term contract management and the risks of vendor lock-in when governments lack internal ‘code-level’ understanding.

Procuring for the future

Public procurement spending amounts to approximately $13 trillion annually. There is a pressing need to shift from short-term efficiency and lowest-price bidding to long-term results and intergenerational equity. Sustainable procurement practices, such as Shenzhen’s switch to electric buses and Oslo’s zero-emission construction machinery mandates, demonstrate how procurement can improve environmental and public health outcomes. Intergenerational procurement explicitly embeds the responsibility to safeguard the needs of future generations.

Digital public infrastructure and tax: strengthening state capacity with shared digital rails

The three digital public infrastructure (DPI) pillars—identity, payments, and data exchange—are expected to reduce compliance burdens. Uganda’s ‘Instant TIN’ interface demonstrates how linking the revenue authority with the national ID agency can streamline onboarding and expand the taxpayer base, particularly among female and rural taxpayers. Integrating tax payments into low-cost digital rails can improve the timing and traceability of collections. However, DPI-tax integration requires robust safeguards to prevent surveillance and ensure citizen trust.

Local leadership for digitalising public administration: lessons from property tax reform in Freetown, Sierra Leone

Freetown’s subnationally led digitalisation of its property tax system resulted in registered properties doubling and actual collection tripling within a year. The reform was underpinned by the Moptax digital platform. This success led to the national government adopting the system as the foundation for a new national Municipal Property Tax System. The case suggests that subnational governments can pioneer digital reforms that are subsequently adopted and scaled nationally, provided there is effective political management and technical design for scalability.

From compliance to agency: the digital journey of South African municipalities

South African municipalities have historically focused on reporting practices for upward accountability, driven by central government requirements like the Municipal Standard Chart of Accounts (mSCOA). This has created a compliance culture that often locks municipalities into restrictive contracts with proprietary vendors. However, the City of Cape Town has started building internal data science capabilities to create in-house solutions using open-source software, delivering results faster than standard tendering processes while ensuring user-centricity.

Unlocking data to mobilise education financing

The global learning crisis affects an estimated 70% of 10-year-olds in low- and middle-income countries. In protracted crisis settings like South Sudan and Lebanon, education data exchange is hindered by fragmented systems and mutual mistrust between domestic and foreign actors. Better data exchange is essential to reduce misallocation and help mobilise aid. The report suggests that existing data must be better leveraged to make a stronger case for investment in education beyond simple administrative indicators.

How digital transformation is reshaping public finance reform: power, accountability and equity in the Pacific

In the Pacific, generative AI is lowering technical barriers for reform. Kiribati developed an AI-powered audit recommendation tracking tool to move from punitive to collaborative accountability. In Micronesia, AI-generated summaries of audit findings helped shift the focus from document production to audience understanding. Fiji integrated AI analysis into its citizen budget platform, allowing participants to connect budgets to results across non-interoperable systems. These cases show that digital tools are changing the terms on which political economy is navigated.

PFM for public welfare in a rapidly advancing digital era

Digitalisation is transforming social assistance cash transfers (SCTs). India’s PMMVY maternity cash transfer programme, which links the Aadhaar digital ID and the Public Financial Management System (PFMS), allows for end-to-end fund tracking. However, the case study reveals design flaws, such as a failure to account for women changing surnames after marriage, which creates authentication errors. The report warns that iterative reforms risk devolving into apolitical experimentation if they do not prioritise substantive welfare outcomes and data justice.