Govt overshoots October spending by Shs684b 

The over spending was driven by non-wage recurrent and domestic development expenditures during. Photo / File 

What you need to know:

  • The performance was mainly driven by non-wage recurrent and domestic development expenditures during the month

The Ministry of Finance has said government overshot its expenditure by Shs684.13b in October. 

The Shs684.13b expenditure resulted in an overall fiscal deficit of Shs2.3 trillion, which was higher than the planned deficit of Shs1.702 trillion, owing to a combination of revenue shortfalls and higher than planned expenditure during the month.

A fiscal deficit occurs when government spends more than raised money.  

Ministry of Finance said expenditure and net lending in October amounted to Shs4.3 trillion, which was 15.4 percent higher than the Shs3.7 trillion planned for the month. 

The performance was mainly driven by non-wage recurrent and domestic development expenditures during the month.

Expenditure on recurrent items, other than wage, was higher than planned for the month as ministries, departments and agencies undertook activities originally planned for the first quarter following government’s deliberate decision to reduce spending during the period to support the Bank of Uganda stance to reduce inflationary pressures.

“Expenditure on domestically financed development projects was 9.1 percent higher than the initial plan for the month as more funds were released for [the second quarter]. This was done to support economic recovery without undermining the objective to control the rising inflation,” the Ministry of Finance said, noting that in a continued bid to support private sector recovery, government had cleared domestic arrears of up to Shs123.46b in October 2022.

During the month, revenue and grants amounted to Shs1.945 trillion, posting a 94.9 percent performance rate against the planned Shs2.05 trillion. 

Of this, Shs181.01b was grants for project support while Shs1.764 trillion was domestic revenue collections for the month, of which Shs1.65 trillion was tax collections while Shs113.45b was non-tax revenue collections. 

Both tax and non-tax revenue posted shortfalls during the month.

The shortfall stood at Shs38.97b mainly registered under indirect taxes and taxes on international trade, which more than offset the surplus registered for direct taxes.

Indirect tax collections for the month amounted to Shs431.62b, posting a Shs27.52b shortfall while both value added tax and excise duty on goods and services such as beer, soft drinks, cooking oil, cement and phone talk time, among others fell short of their respective targets for the month.

The Ministry of Finance also indicated that sentiments about doing business remained positive as measured by the Business Tendency Index, which was recorded at 53.3 in October from 53.1 in September.

Deficit

The Shs684.13b expenditure resulted in a fiscal deficit of Shs2.3 trillion, which was higher than the planned deficit of Shs1.702 trillion. 

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