The Inter-American Development Bank (IDB) and Microsoft today announced the implementation of an early warning system to help Paraguay prevent corruption by detecting indicators of fraud in public purchases.

The system, also known as the “red flags” project, is based on the use of advanced technology and stems from joint work between the IDB and Microsoft to help governments combat corruption, increase transparency and promote integrity throughout Latin America and the Caribbean.

Paraguay’s National Anticorruption Secretariat (SENAC) has helped promote the red flag system while its National Directorate of Public Procurement (DNCP) and other Paraguayan government actors, have also participated in the initiative and provided technical leadership.

Paraguay’s red flags project, which will be implemented in stages, is supported by Microsoft’s Anti-Corruption Technology and Solutions (ACTS) initiative and the IDB's Transparency Fund. It draws on the Bank's expertise in transparency and integrity and Microsoft's technological capacity to predict and identify potential inefficiencies, as well as risks of fraud and corruption in procurement and public contracts.

The project is based on the Open Contracting Data Standard (OCDS) and aims to integrate analytical tools and elements of artificial intelligence to help governments identify risks of fraud and corruption by generating alerts and underscoring questionable activity.

Work with Paraguay has focused on the development of the early warning system, and it will help improve Paraguay’s RindiendoCuentas platform. This tool was built onto the already existing InvestmentMap Platform, which aims to ensure transparency and efficiency in public spending and investment.

The early warning system is also the result of a series of advances made by Paraguay, backed by the IDB, to ensure greater accountability in public investment. This will also help improve the monitoring of public resources dedicated to addressing the COVID-19 healthcare emergency.

In April 2021, IDB President Mauricio Claver-Carone and Microsoft President Brad Smith reinforced the partnership between the two organizations to help create and provide innovative technological solutions that empower governments to prevent and control corruption.

The partnership is part of Microsoft’s ACTS initiative, which is committed to enabling governments to reduce corruption by using cloud computing, data visualization, artificial intelligence, machine learning and other emerging technologies.

Strengthening good governance and improving public institutions is a strategic goal of “Vision 2025,” the IDB’s roadmap for regional recovery and sustainable, inclusive growth. The public sector’s capacity to harness digitalization and new technologies, as well as its ability to promote public-private partnerships, will be a key to making progress in this area.