2024 Public Sector Perspectives

Welcome to Citi Perspectives for the Public Sector Julie Monaco Global Head of Public Sector Group, Corporate Banking A s we usher in 2024, the global economy continues to face challenges, both as a result of higher interest rates and uncertainty about how long they will endure. Economic growth is markedly uneven around the world and some developing countries face difficulties inmanaging their debt burdens in this new era. These challenges are compounded by the pressing demands of the climate crisis and the need to invest in a more sustainable economic model. Ongoing geopolitical tensions – and the potential for disruptive shocks – add further pressure. However, against this backdrop, a positive shift is underway. Governments, NGOs, and multilateral organizations are broadening their horizons beyond immediate crises, and partnering with the private sector to craft pragmatic strategies for a brighter future. Most significantly, the United Nations COP28 climate talks achieved an historic consensus on the need to “transition away” from fossil fuels and ramp up renewable energy in order to meet net zero emissions targets. The COP28 agreement on a Loss and Damage Fund is also a major breakthrough, fostering measures that will enhance climate resilience among the world’s most impoverished and vulnerable nations. In diverse arenas, original perspectives are laying the groundwork for increased prosperity. Development finance, a pivotal force propelling economic progress in developing countries, stands poised to play a critical role in mitigating the impact of climate change in the Global South. Strengthening collaboration between governments, the private sector, and financial markets could amplify the investing power of development finance institutions while mitigating risks for borrowers in emerging markets. At the same time, innovative sustainability and outcome-linked financing tools are emerging, which leverage the voluntary carbon credit markets, for instance. The challenge in 2024 will be to mobilize private capital by scaling such innovations to achieve common goals. Latin America, in particular, exemplifies the transformative power of innovation to stimulate commerce, economic growth, and competitiveness. Open Finance initiatives are sweeping through the region, enhancing the efficiency of financial ecosystems and advancing efforts to bolster financial inclusion. Brazil’s Open Finance program, integral to a comprehensive financial services modernization effort, underscores the significance of clear governance, strong leadership, robust security measures, and meaningful public-private partnerships. Governments worldwide are embracing fresh ideas to address enduring challenges. Faced with aging populations, many nations are committed to ensuring citizens have ample resources for a fulfilling retirement. While investment-related gains remain central to this objective, enhancing operational efficiency is equally crucial. Public pension funds, through optimized bank and custodial relationships and the strategic deployment of technology, can elevate visibility and control, curtail costs, and mitigate risks – yielding enduring benefits for their citizens. In our era of rapid technological advancement, the accelerating pace of change is a constant: many of us have marveled at recent advances in artificial intelligence (AI) in the past year. Beyond their role as regulators, governments are recognizing the potential of AI to transform their functions. While policies and governance are key to building trust and reducing bias, harnessing AI can empower governments and public sector entities globally. It not only strengthens accountability and responsiveness but also enhances convenience for citizens and businesses, ushering in a new era of positive change. The 2024 Citi Perspectives for the Public Sector showcases our expertise across a range of topics, offering insights into global trends while providing practical guidance and emphasizing tangible instances where our solutions have had a meaningful impact. We trust that you find these articles engaging and would welcome your feedback on the issues raised. Please also let us know what topics you would like to see featured in upcoming editions. Citi Perspectives for the Public Sector 5