Uganda: Govt Spent Shs790 Billion More Than Planned in January

25 February 2021

Government spent Shs790b more than what it had been planned for the period ended January, according to the Ministry of Performance of the Economy report.

The report, which covers the month of January indicates that Shs2.17 trillion was spent during the period against planned expenditure of Shs1.380 trillion.

This, the report indicates, widened the fiscal deficit by close to Shs790b during the period thus putting pressure on government revenue.

The report also indicates the deficit was covered with an increase in borrowing from both local and the foreign market.

The deficit, according to Ministry of Finance, was mainly due to a combination of revenue shortfalls and higher than planned domestic development expenditure during the month.

During the period domestic revenues amounted to Shs1.441 trillion, representing a performance of 79.7 per cent against the target of Shs1.809 trillion.

The report also notes that all major tax categories including direct, indirect and taxes on international trade and transactions, recorded shortfalls.

During the period, total revenue collections stood at Shs1.39 trillion while Shs51.1b was non-tax revenue.

The report indicates that direct domestic tax collections were affected by shortfalls on pay as you earn and withholding taxes - two of the largest categories in the tax sub-head, which amounted to 13.5 per cent and 27.5 per cent, respectively.

Collections from income taxes, the report indicates, also fell as a result of Covid-19 that caused loss of job and wage cuts.

Indirect domestic taxes performed at 78.8 per cent against the target with collections on both excise duties and value added taxes recording shortfalls.

Value added tax - the larger of the two, performed at 77 per cent due to lower-than-expected manufacturing and service sector activities.

Nonetheless, there were strong performances by excise duty collections on bottled water and cement and value added tax collections on mobile money transaction.

During the period, taxes on international trade stood at Shs566.08b, representing a performance of 80.3 per cent.

On-target performance by collections on petroleum duties - the second largest in the tax sub-head was offset by underperformances by value added tax collections on import and import duties - the first and third largest items.

The performance was on account of lower than projected import demand due to the adverse effect of Covid-19 on trade.

On-lending

During the period, expenditure and net lending amounted to Shs3.614 trillion, which was Shs276b or 8.3 per cent above projections.

Dr Albert Musisi, the Ministry of Finance commissioner macroeconomic department, said the net or on lending was secured for Uganda Electricity Generation Company Limited to generate more power.

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