Government spent more than planned in July
Government spent more money during July amid a reduction in revenue collection. PHOTO | FILE
What you need to know:
- Petroleum and Import Duty. Taxes on international trade and transactions amounted to Shs560.6b against a planned target of Shs617.6b, which according to the report, was majorly on account of Petroleum Duty and Import Duty - two of the largest items in the tax sub-head, as trade was adversely affected by the lockdown measures imposed by the Government during the month.
Government spending was higher than planned during the first month of the 2021/22 financial year, according to the Ministry of Finance Performance of the Economy report.
This, Finance Ministry said was due to an increase in non-wage recurrent expenditures that exceeded their target and additional resource requirements to support the health sector due to Covid-19.
During the period, according to the report, government operations resulted into a deficit of Shs1.227 trillion, which was almost two times higher than the planned Shs935.8b, on account of a combination of shortfalls in revenue and grants.
Government spending, the report notes, amounted to Shs2.6 trillion, representing a 103 per cent performance against planned expenditure levels on account of non-wage recurrent expenditures that exceeded their target by Shs188.5b and was driven by additional resource requirements to support the health sector as well as provide for cash relief to vulnerable sections of the population affected by the Covid-19 related lockdown.
However, during the period wages and salaries were slightly below target due to delays in recruitment.
Development expenditure amounted to Shs934.42b, performing at 96 percent due to less disbursements received for externally financed projects, which amounted to Shs131.1b, representing only 23.1 per cent of the target.
Domestically financed development spending, the report notes, amounted to Shs803.32b, which was nearly double the target for the month.
Within the Domestically financed development spending category, the report notes, Shs490b was spent on the purchase of machinery and equipment under the Ministry of Defense, while Shs110b was spent on the purchase of motor vehicles under Parliamentary Commission.
The report also notes that during the period government collected Shs1.384 trillion, which represented a 90.6 per cent performance against the planned Shs1.528 trillion. Of this, Shs1.3 trillion was tax revenues while Shs39.6b was non-tax revenues.
However, during the period, government had a shortfall in revenue collections due to underperformances of indirect domestic and international trade taxes, which offset the stronger performance by direct domestic taxes.
Revenue collections were affected by restrictions imposed to curb the spread of Covid-19, which slowed down economic activity during the month.
Direct domestic tax collections amounted to Shs449b against the planned Shs416.4b, mainly due to good performance of Pay As You Earn, which exceeded the targets by Shs36.29b.
Indirect domestic tax collections posted an 81.7 per cent performance due to underperformance of Excise Duty on spirits, phone talk time and internet data and value added tax on beer, sugar and wholesale and retail trade, all of which were affected by the lockdown.
