The Role of Digitalization in the Development of Public Finance

Abstract

The article explores the role of digitalization in the development of public finance, highlighting its key advantages, challenges, and directions for implementing digital technologies in financial resource management. It is determined that digitalization is a key factor in enhancing the transparency, efficiency, and accountability of budgetary processes. The integration of big data analytics, artificial intelligence, and blockchain technologies contributes to process automation, improves revenue and expenditure forecasting, and enables the timely detection of deviations or violations.
The study examines the implementation of digital platforms such as ProZorro and “Diia,” which have significantly increased the transparency and accountability of budget expenditures while strengthening public trust in government authorities. It has been established that expanding their functionality through the integration of artificial intelligence and automation of financial operations opens new opportunities for improving public finance management efficiency.
At the same time, the digitalization process faces challenges, including the insufficient level of digital literacy among civil servants, uneven access to digital services across regions, high modernization costs for infrastructure, and the complexity of integrating new technologies with existing systems. Overcoming these barriers requires a systematic approach that includes developing digital infrastructure, reforming legislation, fostering financial technologies, and strengthening cybersecurity.
The study analyzes international experience in the digitalization of public finance across various countries. Using China as an example, which demonstrates a high level of integration of information and communication technologies into financial management, it is shown that their application enhances transparency, reduces costs, detects deviations, improves imperative planning, and increases the accountability of public officials. Moreover, digitalization contributes to strengthening a country’s financial sovereignty. In particular, the use of automated control and monitoring systems significantly enhances the accountability of government agencies. China’s successful experience demonstrates the potential for effectively integrating digital technologies with public financial policy. For Ukraine, this opens up prospects for introducing a mixed economic system that combines market mechanisms with effective state regulation. The implementation of such approaches, coupled with profound social transformations, will contribute not only to the digitalization of public finance but also to strengthening social security and ensuring the long-term development of the country.
The research findings have both theoretical and practical significance for the development of a national strategy for the digitalization of public finance. A set of measures is proposed to enhance public trust in government institutions, reduce financial losses, optimize expenditures, and improve Ukraine’s international competitiveness. The integration of digital technologies will not only enhance the transparency of budgetary processes but also ensure the long-term stability of the country’s financial system. Further research should focus on improving digital ecosystems, adapting international experience, and assessing the socio-economic impact of digitalization.