Efficiency at a Cost: How a Fiscal Rule on Disbursement Timelines Shifted Public Investment Toward Repairs

A 2021 fiscal reform in Thailand introduced a one-year deadline for disbursing public investment budgets, replacing flexible timelines. Analysis of more than 360,000 projects using machine learning and difference-in-differences methods shows agencies shifted toward smaller, repair-focused projects that are faster to execute and carry lower compliance risk. This shift improved disbursement rates, meeting efficiency goals. However, tighter deadlines also altered investment composition by incentivizing administratively easier projects over larger construction initiatives, highlighting how fiscal rules shape organizational behavior, implementation strategies, and long-term public investment priorities.

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