Uganda government spending soars in April, report says

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KAMPALA – The total expenditure of the Ugandan government in April 2024 amounted to Sh3,463.61 billion, a performance rate of 105.09% against the target of Sh2,992.43 billion.

This follows from the report on the performance of the economy in April, published by the Ministry of Finance on Tuesday (May 21).

It said the higher-than-planned spending was due to an increase in recurring spending that was above plan by 31.92%, as salaries, interest payments and non-salary spending were all above their respective objectives during the month.

“This was largely attributed to supplementary budgets allocated during the financial year to cover wage and non-wage shortfalls, resulting in higher expenditure than initially anticipated at budget time when the monthly programs were set,” it says. The report.

He also said expenditure on salaries and wages amounted to Sh603.18 billion, against the target of Sh537.74 billion.

Similarly, non-salary expenditure amounted to Sh1,485,850 million against the target of Sh992,150 million, while interest payments amounted to Sh261,820 million against the target of Sh252,130 million, mainly driven due to depreciation pressures, which increased the amount in shillings that had to be paid to service the external debt.

However, development spending amounted to less than forecast at Sh1,108.76 billion, against the target of Sh1,206.62 billion. This was mainly due to underspending on external developments of Sh318.83 billion against the target of Sh460 billion, the report added.

Revenue Collections

In April 2024, government operations resulted in a fiscal deficit of Sh1,301.61 billion, which the report said was higher than the target of Sh405.32 billion for the month.

“This was due to a shortfall in revenue and subsidies and higher than anticipated spending,” the report said.

Domestic revenue collection in April 2024 amounted to Sh2,127.39 billion, performing 89.4% against the target of Sh2,379.73 billion, thus recording a deficit of Sh252.35 billion. shillings. This was mainly due to the shortfalls recorded in the collection of tax and non-tax revenues.

Tax revenue collection amounted to Sh1,994.07 billion against the planned target of Sh2,198.04 billion in April 2024, recording a deficit of Sh203.97 billion. This was mainly due to international trade taxes and Value Added Tax (VAT), which performed at 86% and 82% respectively.

Taxes on international trade amounted to Sh790.96 billion, against the target of Sh921 billion, recording a deficit of Sh130.03 billion.

The report says this is mainly due to poor performance in VAT on imports and taxes on petroleum, with shortfalls of Sh61.82 billion and Sh49.79 billion respectively.

Similarly, indirect domestic taxes amounted to Sh565.01 billion against the target of Sh677.82 billion, recording a shortfall of Sh112.81 billion, mainly due to lower than expected collection in VAT and special taxes.

VAT collection amounted to Sh378.21 billion, recording a shortfall of Sh80.64 billion against the target of Sh458.85 billion.

“This was largely attributed to declining production volumes of important supplies such as sugar, cement and soft drinks, among others,” the report said.

Excise duty collection amounted to Sh186.80 billion against the planned amount of Sh218.96 billion, recording a deficit of Sh32.17 billion, this was mainly due to lower than planned collections in beer and spirits.

On the other hand, direct internal taxes in April 2024 amounted to Sh680.58 billion against Sh643.36 billion, recording a surplus of Sh37.22 billion.

This was mainly due to higher-than-expected collections under Pay As You Earn (PAYE), which amounted to Sh433.49 billion against a target of Sh382.90 billion, recording a surplus of Sh50.59 billion shillings.

“This performance was mainly due to increased hiring and higher salaries in the public service due to increased salaries in the scientific cadre and in the private sector, especially in the manufacturing and banking sectors,” the report says.