Harnessing Artificial Intelligence in Public Finance Management: Balancing Opportunities and Risks Across Diverse Governance Contexts

Abstract

Artificial Intelligence (AI) rapidly evolves public finance management by improving fiscal responsibility, tax collection, and expenditure tracking's accuracy, efficiency, and transparency. However, serious hazards are associated with its adoption, including algorithmic prejudice, cybersecurity flaws, and governance issues. This study examines the potential benefits and hazards of artificial intelligence in public finance systems using a qualitative, exploratory research design. The research methodology combines a thematic analysis of secondary expert insights, a systematic literature review, and a comparative assessment of three nations: Estonia, Singapore, and India.In contrast to India, which is an emerging nation experimenting with AI in tax compliance, Estonia and Singapore are examples of advanced economies having sophisticated AI-enabled fiscal tools. This comparison method offers detailed insights into how contextual elements influence the risks and opportunities associated with adopting AI. The results indicate that while AI can greatly improve budget forecasts, tax compliance, and fraud detection, it also runs the risk of eroding public confidence and equity in the absence of strong ethical and regulatory controls. By putting forth a Responsible AI Framework for Public Finance, it advances research and practice by providing decision-makers with a well-rounded approach to maximise AI's promise while reducing related dangers.