Asset Management Fiscal Discipline and Revenue Inequality: The Case Study of Provincial Administrative Organizations

Abstract

This article presents the findings of a comprehensive study on the asset management of 76 Provincial Administrative Organizations (PAOs) in Thailand, using data from the fiscal year 2022 compiled by the Office of the Auditor General. The study reveals several significant insights. Firstly, while the asset allocation patterns among the 76 PAOs exhibit similarities, detailed analysis reveals substantial differences, particularly regarding investment allocation (short-term vs. long-term). It was observed that 50 PAOs allocate a higher proportion of assets to short-term investments, possibly indicating excessive liquidity. Generally, long-term investments yield higher returns compared to short-term ones. Conversely, 26 PAOs allocate more assets to long-term investments, reducing short-term investments could potentially benefit income from interest. Secondly, there is a clear disparity in asset ownership (measured by the Gini index calculated as assets per capita). The Gini index stands at 0.39, indicating a high level of inequality. In comparison, the income per capita index is 0.21. This indicates a considerable disparity in asset distribution among the regions. Thirdly, the study highlights cautiousness in personnel expenditure, with a controlled proportion not exceeding 40% of the budget, as per regulations. However, some PAOs (a minority) are beginning to exceed this threshold, signaling a need for caution, particularly if there is a transfer of responsibility for sub-district health promotion hospitals. This could potentially increase the burden of personnel expenditure. A key recommendation is that when transferring sub-district health promotion hospitals in line with government policies, the Budget Bureau should allocate funds to support salaries and compensation for personnel based on the transferred responsibilities.