This study analyzes the effects on poverty incidence and other variables resulting from government expenditures associated with natural resource revenues, using Laos as a case study. The analysis uses a multi-sector/multi-household general equilibrium model of the Lao economy. The conceptual framework emphasizes the distinction between official and marginal expenditures financed by project revenues. A range of assumptions is considered regarding the direct distributional impact of the true marginal expenditures and their implications are compared. Poverty incidence declines under the entire range of distributional assumptions, but the most important determinant of these impacts is the degree of pro-rural bias.