Govt raises Shs884b from sale of securities to finance public expenditure

Finance Minister Matia Kasaija

Government raised Shs884.05 billion from three auctions of treasury bills and treasury bonds (securities) in October 2021 to finance public expenditure during the month due to shortfalls in domestic revenue collection.  

The Ministry of Finance Planning and Economic Development said in the economic performance report for the month of October, which Daily Monitor has seen that of this, Shs364.50 billion was in treasury bills while Shs519.55 billion was in treasury bonds. Shs788.06 billion of the proceeds was used for domestic debt refinancing, while Shs96.0 billion was for financing other activities in the government budget.

The Finance Ministry further reported that annualised Yields (Interest Rates) on treasury bills during the month edged upwards for the 182-day and 364-day tenors but declined for the 91-day tenor.  

Domestic Revenues

Domestic revenue amounted to Shs1.556 trillion, representing a performance of 91.1 percent (or a shortfall of Shs.151.77 billion) when compared to the monthly target. Shortfalls amounting to Shs124.28 billion and Shs27.48 billion were recorded for both tax and non-tax categories, respectively.  

The Ministry says this performance was mainly as a result of the adverse effects of the Covid-19 pandemic on the economy and delays in implementation of some planned tax measures for financial year 2021/22. 

Tax collections in the month amounted to Shs1.468 trillion, representing a shortfall of Shs124.28 billion of the monthly target as all the major tax heads, that is; direct taxes, indirect taxes, and taxes on international trade and transactions performed below target.

 The report said the biggest shortfall was recorded in indirect taxes (Shs88.1 billion) of which VAT accounted for Shs74.2 billion or 84 percent.  

“VAT was mainly affected by lower than anticipated production of beer, spirits, sugar, soft drinks and cement. Excise duty also posted a shortfall of Shs13.9billion due to lower than anticipated consumption of spirits, beer, soft drinks and internet data,” the report reads in part.

During the month, direct tax collections amounted to Shs422.13 billion, registering a shortfall of Shs12.01billion.

 This was mainly on account of lower than planned tax collections for corporate, withholding and rental income. The shortfalls more than offset the surplus collections of Shs5.60 billion and Shs21.07 billion recorded for PAYE and taxes on government securities, respectively.

Tax collections on international trade and transactions amounted to Shs666.11 billion against a planned target of Shs714.30 billion for the month.

The Ministry of finance explains that this performance was mainly on account of lower than planned collections for import duty. 

Non-tax collections amounted to Shs88.36 billion against a planned target of Shs 115.84 billion, thus posting a performance of 76.3 percent of the monthly target, and continue to be affected by restrictions on operations of MDAs.


During the month, government expenditure amounted to Shs 2.936 trillion, which reflects a performance of 86.2 percent against the monthly planned target of Shs 3,407.26 billion. This was attributed to the underperformance of externally financed spending on development activities.

Development expenditures amounted to Shs 960.53 billion, which translates into a performance of 61.2 percent against the planned spending levels as both domestically and externally funded development activities underperformed.

The Ministry of Finance says domestically financed development expenditure was affected by the downward revision of the budget due to anticipated revenue shortfalls during the financial year, while externally financed development expenditure was affected by low disbursements due to absorption challenges among MDA’s. 

On the other hand, wages and salaries payments were worth Shs503 billion, exceeding the monthly target by Shs.34.1billion. This was mainly due to additional recruitment in the health sector and Uganda Police during the month.