The Role of Financial Digital Transformation and Its Impact on Improving Financial Discipline Indicators: An Analysis of Public Finance Indicators in Iraq for the Period (2015-2024)

Abstract

Financial digital transformation is one of the most prominent changes affecting public financial management in the context of the rapid technological advancements of the Fourth Industrial Revolution, particularly in e-banking. In an effort to improve the efficiency of financial management and achieve fiscal discipline, governments are increasingly using digital technologies to manage public revenues and expenditures, public debt, and the national budget, all in the pursuit of financial sustainability and economic stability. The study's findings indicate that Iraq witnessed a gradual improvement in digital transformation indicators and government digital participation during the period 2015–2024. However, integration among institutions remains limited, and participation in decision-making is still weak, reflecting the slow and incremental nature of financial digital transformation. Conversely, public finance indicators were characterized by fluctuations between deficits and surpluses, high public debt, and a volatile spending-to-GDP ratio, reflecting weak fiscal discipline and the reliance of fiscal policies on emergency situations such as dependence on oil revenues and economic crises. Therefore, these findings suggest that, with proper implementation, financial digital transformation can enhance fiscal discipline by improving financial planning, expenditure monitoring, and transparency, thereby ensuring financial stability and promoting long-term economic growth. The researcher recommends accelerating the full adoption of digital financial transformation in government institutions to improve fiscal discipline in Iraq. This includes increasing the transparency of financial management, using digital systems to track revenues and expenditures, and improving integration among various entities. To achieve financial stability and promote sustainable economic growth, this will help reduce spending, lower the deficit, and manage national debt efficiently.