Public and social sector leaders resetting strategic priorities to build resilience

Partner and Group Head of Public and Social Sector at Forvis Mazars, Peter Cudlip, said: “We are at a critical juncture, but with some of the biggest opportunities for leaders to challenge the norm and shape best practice in a period of significant change. 2024 is a landmark year with some of the biggest elections around the world. There are bold decisions that can be made for the years ahead and I am confident in the value of working together to achieve this as we enter a new era built for resilience, to better serve people and communities.”

• Executives in the public and social sector are generally optimistic: 58% expect funding to increase in the next financial year, but this is a significant drop from 85% last year.
• Economic factors, including high inflation and cost of living (27%), and increased demand for services and political change (each 26%) are three of the top external trends impacting organisations most in the coming year. The emergence of new technologies (23%) and scarcity of talent (22%) are also expected to impact organisations significantly and only 25% are confident they're prepared for this. 
• Meeting demand for services is a potential issue for a quarter of organisations stating they will likely fail to achieve this.
• Boosting investment of time, money and resource, averaged across all business activities and operations, is expected by 50% of organisations. While maintaining IT and digitising operations are at the top of this list, funding/financing issues or concerns is at the bottom, second only to reducing headcount.
• Scarcity of talent is one of the top five external trends leaders say will impact the sector in the next three to five years, with nearly two thirds (63%) of executives confirming a difficulty in hiring talented people. Yet, crucially, talent strategy is only positioned at number nine in their strategic priorities for the year ahead.
• Transformation through IT or emerging technology is the top strategic priority for leaders for the second year running. 79% of public and social sector organisations are already using generative AI in some form and, of those who don't, 44% say they will in five years' time. Yet, 69% of those already using generative AI in their organisation say they have ethical concerns. 

While transformation through IT or emerging technology is the top strategic priority for leaders across all sectors globally, only 22% of leaders in Romania share this view. Instead, many Romanian leaders are prioritising international expansion or developing and revising new attraction and retention strategies.

“Additionally, in other sectors, 67% of companies are already using generative AI, whether for internal processes or commercial products and services, with 39% expressing ethical concerns. When asked if there are significant government regulations controlling generative AI in Romania, 50% of leaders believe there are. Furthermore, almost 95% agree that it is extremely important to have more regulation, either nationally or internationally, to control generative AI.”, mentioned Horațiu Nistor, Senior Manager, IT Audit & Advisory, Forvis Mazars in Romania.

• Generative AI will not replace people according to 64% of leaders, proving that human skills are still very much valued within such a people-orientated sector.
• Sustainability responsibilities are a clear focus for sector leaders – 76% of public and social sector executives say they already produce a sustainability report or plan to in the next 12 months. Over 50% of leaders say new regulations would be more effective than internal or external pressure in accelerating reporting.

The role of NAFA in the digitalisation process of the Romanian public sector

The National Agency for Fiscal Administration (NAFA) is at the forefront of Romania's digital transformation in the public sector, with several key initiatives aimed at modernising fiscal and administrative processes. Central to these efforts are the RO e-Invoice, RO e-Transport, and the Standard Audit File for Tax (SAF-T) initiatives.

“One of NAFA's major achievements in digitalisation is the implementation of the RO e-Invoice system. This initiative revolutionises the way invoices are processed and managed within the Romanian economy. The RO e-Invoice system has been implemented since July 2022, but only for B2G transactions. Since then, NAFA has made significant strides in expanding and refining this system to encompass B2B (mandatory since January 2024) and B2C transactions (mandatory since January 2025), further broadening its impact and utility,” mentioned Bianca Vlad, Tax Partner, Forvis Mazars in Romania.

By making electronic invoicing mandatory for a wider range of transactions, NAFA enhances the transparency, accuracy, and efficiency of financial operations. Businesses can now enjoy quicker invoice processing times, reduced administrative burdens, and improved cash flow management, while the government benefits from more accurate and timely tax collection.

„Alongside the RO e-Invoice system, the SAF-T and RO e-Transport systems are two implemented measures in NAFA's digitalisation process designed to bring transparency and improve tax collection, particularly VAT, where Romania faces the highest gap in the EU.”, mentioned Edwin Warmerdam, Partner, Head of Tax, Forvis Mazars in Romania.

As Romania continues to embrace digitalisation, these efforts collectively drive sustainable economic growth, improve public trust in governmental operations, and position the nation as a forward-thinking leader in the digital age.