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The paper addresses one of the key features and expectations of the PRGF: are budgets more pro-poor and pro-growth? Relying on abundant data gathered from numerous countries, the authors show that indeed the composition of both budgeted and actual public spending is shifting towards poverty-reducing activities in countries with a PRGF program. In particular, the paper shows that countries are allocating more to education and health care in their budget and that actual outlays in these sectors have also increased. The paper also makes the case for increased flexibility in accommodating higher spending when unexpected foreign aid becomes available.
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