<![CDATA[Background: Year-end spending spikes (YESS) remain a persistent fiscal governance challenge. Under previous regulations, PNBP-funded work units faced liquidity constraints that delayed budget execution. PMK 110/PMK.05/2021 addressed this issue by introducing a pre-financing mechanism that enabled earlier budget implementation. Objective: This study evaluated the causal impact of the pre-financing policy under PMK 110/PMK.05/2021 on accelerating public budget execution and mitigating year-end spending spikes. Methods: Using an unbalanced panel of 15,195 observations from 3,660 Non-Tax State Revenue spending units, this study employed a Window-Exclusion Difference-in-Differences (DiD) design with two-way fixed effects as the causal identification strategy. The analysis compared the 2019 baseline with the 2022–2025 post-implementation period while excluding the pandemic years of 2020–2021. Results: The empirical results revealed that liquidity relaxation significantly increased the Front-Loading Spending Index, with benefits observed exclusively among centralized-scheme units, small-budget entities, and essential services. A quarterly decomposition analysis confirmed a symmetrical structural transformation, in which the policy substantially reduced Quarter IV spending accumulation by 7.37 percentage points and redistributed the same proportion to earlier quarters. Conversely, administrative rigidities, particularly early-year budget blocking and frequent revisions, structurally decelerated budget absorption. Conclusion: The findings suggest that the pre-financing scheme should be considered for extension to non-centralized units, particularly medium-budget entities. They also highlight the need to accelerate early-year budget unblocking and improve planning quality to minimize budget fluctuations caused by frequent revisions.]]>
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