The Spending and Absorption of Aid in PRGF Supported Programs

46 Pages Posted: 18 Dec 2008

See all articles by Paolo Dudine

Paolo Dudine

International Monetary Fund (IMF)

Markus Berndt

European Investment Bank

Abu Shonchoy

Florida International University (FIU) - Department of Economics

Jan Kees Martijn

International Monetary Fund (IMF)

Date Written: October 2008

Abstract

This paper studies the spending and absorption of aid in PRGF-supported programs, verifies whether the use aid is programmed to be smoothed over time, and analyzes how considerations about macroeconomic stability influence the programmed use of aid. It finds that PRGF-supported programs allow countries to use most or almost all increases in aid within a few years. The paper finds some evidence that the programmed absorption of aid is higher in countries where reserve coverage is above a certain threshold, whereas programmed spending does not seem to depend on inflation. Finally, it shows that the presence of a PRGF-supported program does not constrain the actual spending and absorption of aid.

Keywords: Absorptive capacity, Development assistance, Poverty Reduction and Growth Facility, Financial stability, Inflation, Developing countries, Economic models

Suggested Citation

Dudine, Paolo and Berndt, Markus and Shonchoy, Abu and Martijn, Jan Kees, The Spending and Absorption of Aid in PRGF Supported Programs (October 2008). IMF Working Paper No. 08/237, Available at SSRN: https://ssrn.com/abstract=1316705

Paolo Dudine (Contact Author)

International Monetary Fund (IMF) ( email )

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Markus Berndt

European Investment Bank ( email )

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Abu Shonchoy

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 3199
United States

Jan Kees Martijn

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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