Posted by Emre Balibek[1]
One after another, governments around the world are announcing policy responses to mitigate the socio-economic impact of the COVID-19 pandemic. Discussions centered at the policy level are vital to design measures that support people, firms and sectors, mitigate the impact on incomes and jobs as much as possible, and avoid permanent damage. It is equally important that ministries of finance and state treasuries continue to operate effectively under these extreme circumstances so that policy measures can be implemented as planned.
Many modern treasuries have put in place business continuity and disaster recovery plans (BCP/DRP) to ensure their core business operations are maintained and losses arising from any business disruption are limited. These plans typically assume a number of scenarios that can disrupt business processes and include measures that can be activated when needed (Storkey, 2011). Scenarios covered in BCP/DRP range from infrastructure and technology failures, to accounting for possible disruptions in computer systems, power, and telecommunications, to natural disasters such as earthquakes, severe flooding, hurricanes or cyclones that may affect treasury premises, data and physical records. Most treasuries now maintain data back-up centers or even secondary (or satellite) sites away from their primary premises, which can be employed immediately should there be a disruption that affects physical infrastructure. Existing BCP/DRPs are thus focused largely on protecting businesses from system failures and data losses.
The COVID-19 crisis requires some additions to this approach. An epidemic (or pandemic) creates a situation where physical infrastructure is in place, but a government entity’s most precious resource—its employees—is affected. Where employees are confined to their homes, the ability to work remotely may be the only viable option. This solution is now increasingly feasible with web-enabled systems, good internet services, and encryption mechanisms that are put in place beforehand. However, it remains questionable in many countries whether the processes of executing the budget on a day-by-day basis can be executed remotely.
Many governments still rely on manual approval processes to execute salary payments or the purchase of goods and services, transfer cash, or conduct borrowing auctions. Ministers may have to sign budget virements, accountant generals may have to approve electronic fund transfers, heads of borrowing units (or sometimes ministers) might sign off on cut-off yields in government securities auctions. Modern FMIS systems are able to set up automated workflows and approval mechanisms, but these systems may only be accessible from the primary and secondary sites, not from remote locations.
It is time for ministries of finance, treasuries and debt management departments to upgrade their BCPs for situations where their employees need to work remotely for an extended period. Decision making, command and approval processes should be reconsidered to enable continuity of operations. For example, some processes that include several ex-ante controls could be simplified when the BCP is activated, replacing some pre-approval requirements with ex-post audits within a short timeframe. Other manual or electronic workarounds with appropriate safeguards could be established to execute critical control processes.
Assigning back-up responsibilities will be crucial to execute time-bound activities, such as running a treasury bill auction that has to be concluded in a given timeframe. If the primary authority to approve the cut-off point is not accessible, the BCP should designate who is next in the command line.
The BCPs should also include preventive measures to protect employees. Such measures can include identifying a limited number of “critical staff” who are required to report to work on a permanent basis, and who would replace them if needed. Splitting operations can be considered. Employees may take turns in reporting to primary and secondary sites (or staying home), so that they can keep a distance from each other. In this way, not all staff are affected at the same time in case a quarantine is required.
It is not crucial for all business processes to continue operating as usual under extreme circumstances. The BCP should identify and document key process that are essential. The plans should normally be revisited regularly to reassess the criticality of businesses. Such practices will enable the ministry of finance and treasury to rely on a smaller number of staff who continue to operate key business processes.
This article is part of a series related to the Coronavirus Crisis. All of our articles covering the topic can be found on our PFM Blog Coronavirus Articles page.
[1] Senior Economist, Fiscal Affairs Department, IMF.
Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.
