Govt maintains cautious spending

Government has been cutting expenditure since July last year. Photo / File 

What you need to know:

  • The spending pattern implies that government is increasingly guarding against borrowing, which fuels a rise in public debt and constrains debt servicing

Government continued to exhibit a cautious spending regime, cutting down expenditure by at least Shs352.9b during January. 

During the month, government spent Shs3.3 trillion, a 94.6 percent performance against a planned Shs3.5 trillion, resulting into Shs973.6b deficit compared to the planned Shs1.3 trillion. 

The pattern implies that government is increasingly guarding against borrowing, which fuels a rise in public debt and constrains debt servicing.

During the period, government spent Shs979.7b or a performance rate of 83.6 percent against a planned Shs1.177 trillion while domestic development expenditure took Shs842.3b against a planned Shs991.5b. 

However, revenue and grants were higher than planned with domestic revenue collections amounting to Shs2 trillion against the planned target of Shs2.1 trillion. 

The report also indicated that of the total collections, Shs1.9 trillion was tax revenue while Shs145b was non-tax revenue collections.

Tax revenue collections for the month were largely on target, posting a 98.5 percent performance rate (Shs29.47b shortfall) against a planned Shs1.968 trillion.

“This performance was mainly driven by the lower than planned collections for indirect [consumption] taxes and taxes on international trade, which more than offset the surplus collections registered under direct [income] taxes,” the report reads in part. 

Direct domestic taxes amounted to Shs653.6b, posting a Shs44.5b surplus against the Shs609b target mainly on account of higher than planned collections for pay as you earn. 

Pay As You Earn collections have continued to post surpluses driven by recruitment in the private sector, particularly the oil and gas sector and salary increments for some civil servants.

However, indirect taxes are still affected partly by a decline in sales and production volumes for items such as soft drinks, beer and cement, among others. 

Indirect tax collections for January amounted to Shs510.5b against a planned target of Shs572.2b as both excise duty and value added tax collections registered shortfalls.

Collections from international trade taxes stood at Shs775.6b, a 99.9 percent performance against a Shs775.7b planned target. 

“This performance was mainly driven by surplus collections registered under import duty, excise duty and [value added tax] on imports. Non-tax revenue collections for the month amounted to Shs145b, a Shs10.8b surplus compared to the target for the month,” the report said, noting that the improved performance was due to continued streamlining of operations and improved coordination among the government agencies responsible for collecting non tax revenues. 

On the financing side, the report said government received budget support loans worth $242.11m and $140.86m from the International Monetary Fund and Standard Chartered Bank, respectively January.