In October, the government of Uganda witnessed a notable rise in both recurrent and development expenditure, with an increase of Shs459.24 billion. This surge followed the release of the budget expenditure report for the second quarter of the fiscal year 2023/2024, which also showed an upward trend.
Government spending encompasses the funds allocated by the public sector to acquire goods and provide services such as education and healthcare, among other public needs. According to the Ministry of Finance’s economic performance report for October, the total government expenditure reached Shs4.3 trillion.
The report highlighted that this expenditure exceeded the programmed amount of Shs3.8 trillion, indicating an 11.8 percent increase above the monthly target. Both recurrent items and development projects witnessed higher spending than initially planned.
The Ministry of Finance revealed that recurrent spending amounted to Shs2.4 trillion, surpassing the monthly program by 0.8 percent. The increase was primarily attributed to non-wage non-interest recurrent expenditure.
Furthermore, the government significantly augmented the funds allocated for development projects during the second quarter. Consequently, domestically financed expenditure on development projects reached Shs1.6 trillion, nearly double the programmed amount for the month, which was Shs836.7 billion. This move aimed to enhance the execution of development initiatives.
In terms of revenue collection, the government anticipated collecting domestic revenue worth Shs2.1 trillion in October, comprising Shs1.9 trillion from tax revenue and Shs162.39 billion from non-tax revenue. However, the actual collection fell short of the target, amounting to Shs1.9 trillion and thus reflecting a shortfall of Shs153.08 billion (7.2 percent below the monthly target).
Tax revenue collections reached Shs1.8 trillion, indicating a shortfall of Shs109.55 billion (5.5 percent below target) for the month. The Ministry of Finance attributed this shortfall primarily to underperformance in taxes on international trade transactions, with a collection of Shs744.63 billion against a target of Shs878.16 billion. This can be attributed to lower-than-anticipated imports subject to value-added tax (VAT) and petroleum imports during the month.
Additionally, indirect domestic taxes fell short of the monthly target by Shs42.4 billion, with excise duty and VAT both failing to meet their respective targets by Shs20.08 billion and Shs22.41 billion. However, direct domestic taxes surpassed expectations, reaching 112.4 percent and totaling Shs631.03 billion, mainly driven by Pay as You Earn (PAYE), withholding tax, and corporate tax.
Overall, October witnessed a significant increase in government expenditure, particularly in both recurrent and development spending. However, revenue collection fell short of the projected targets, primarily due to underperformance in taxes on international trade transactions and indirect domestic taxes.
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