There are three main characteristics that emerge from the introduction of digital technologies in the management of municipal finances: first, there is an increasing demand for online services, particularly for improving tax administration and access to municipal services; secondly, there are new citizen participation channels in both the planning processes of local development and in monitoring of municipal public services; and thirdly, there is a closer interaction between citizens and local governments, which leads to a better knowledge of the activities carried out by the administration and, therefore, fosters a greater transparency in the use of public resources.

Furthermore, we observe that municipal governments have been shifting from e-government strategies (focused on the use of ICTs as a tool to deliver better services) to Digital Government Strategies, that embrace ICTs as the backbone of governmental modernization and public value creation for a multitude of local actors such as the entrepreneurial sector, non-governmental organisations, citizens´ associations, academic and research centres and different segments of the local population. In this context, the new practices of “open government” and “open-data” gain importance, given that they are mechanisms that enable local actors to influence the municipal public offer.

In my opinion, the main impacts of the use of ICTs in municipal finances are related to: (i) simplify tax and services’ fees collection; (ii) achieve a better resource allocation; (iii) enable the monitoring of plans, projects and the performance of municipal services; and (iv) accomplish a better and more efficient social control of the municipal initiatives.

An example of the use of ICTs to improve tax collection was carried out by the Municipality of Cali, Colombia. The city launched in 2013 the programme “Online Taxes” (Impuestos en Línea), which allows citizens to pay their property and betterment tax, while also providing taxpayers with assistance services, including: invoices issuance, electronic self-reporting, request a payment certification, among others. Another interesting example is the “payment of vehicular circulation licenses” in Peñalolén, Chile. The application allows individuals, to pay the license fee online and to show their current license directly in their mobile device.

Another area where cities have been using ICT are the citizen attention programmes. These applications allow local governments to establish a unique registry of municipal programmes’ beneficiaries, facilitating both the control of resources allocation and the focus on the most vulnerable sectors of the population. An example of this application is the programme “en todo estás vos” of the city of Buenos Aires, Argentina. This network is an information system that allow for an integrated management of beneficiaries’ databases from more than 20 social programmes and municipal subsidies.

ICTs can also be applied to investment planning and management. One example is the application: “Sigamos Medellin” which enables citizens to monitor in real time all municipal public works. In addition, the application allows to know the investments’ price and report complaints or observations for those projects, leading to a greater transparency in the use of public resources.

First, there is a risk of addressing the projects from a strictly technological perspective, without considering the inherent challenges entailed by municipal management modernization projects. For this reason, any project where ICTs are used to improve municipal management, must be carried out jointly between city employees from functional areas directly involved in the project and specialists in information systems.

A second risk might be initiating projects without having good knowledge of the existing solutions in the market or without a good analysis of international best practices. This aspect is particularly important, provided that municipalities have a strong potential to learn from one another and share successful solutions already implemented elsewhere.

Finally, a third risk would be to implement ICT-intensive projects in an isolated way without being part of a global municipal digital strategy. The importance of this factor lies in the fact that ICT have the capacity of changing the way in which the population access municipal services, regardless of whether those services are under the responsibility of the area of education, health, public works, finance or any other. In addition, an integral approach towards digital services provided by the municipal government, can lead in important economies of scale and promote a better communication with citizens.

Considering the heterogeneity of local governments in the region, recommendations about the use of ICTs in fiscal municipal management should be done only on a case to case basis. In spite of this, it is still possible to identify some general recommendations. When implementing projects to improve municipal finances management based on ICTs, municipalities must make sure to: have the necessary connectivity infrastructure; include the ICTs projects within a Digital Government Strategy oriented to improve municipal services in an integrated manner; participate in municipal governments’ networks to exchange best practices and information with their peers; build on the local capacity to innovation by establishing the necessary tools to make municipal data available to the public. Additionally, it is important that these projects are supported and encouraged by high-level authorities of the municipalities as this will determine the success of institutional efforts coordination and the use of the new applications in their launching phase.

The IADB has a wide experience in supporting financial management modernization both at a national and subnational level. Most of the programmes led by the IADB integrate the use of ICTs in critical processes and areas related to the management of subnational finances. Particularly, the Bank supports the following lines of actions: (i) the definition of a research agenda to identify and disseminate good practices concerning the use of ICTs in financial management. A good example is an ongoing research about “Digital Government and municipal management” in which we analyse the development degree of the digital government at a municipal level and we identify a set of good practices with the potential to be replicated; (ii) the development and implementation of technical cooperation initiatives with a regional scope that allow us to support the work of local governments’ associations, and to exchange experiences, best practices and information about problems and solutions of common interest; and (iii) the financing of programmes to strengthen local governments’ finances, where we provide funding to improve systems of: financial management, cadastral and tax administration, planning and project management, and open government solutions. All these programs aim at integrating the technical needs in fiscal management with potentialities offered by ICTs.