This analysis explores the need for public expenditures and improved revenue-generating capacity in severely poor countries. The analysis resembles a “policy matrix,” listing the underlying variables that influence revenues and expenditures and affect future policy choices aimed at meeting expenditure needs. The aim of this study is to help policymakers understand the potential impact of economic, demographic, and institutional changes on the ability of a government to finance public expenditures. The final section provides a summary of policy options directed to highly-indebted poor countries.
