Govt spending soared to Shs4.3 trillion in October

The government spending for recurrent and development expenditure went up by Shs459.24 billion in October. This follows the release of quarter two budget expenditure for the fiscal year 2023/2024, which also increased.

Government spending refers to money spent by the public sector on the acquisition of goods and provision of services such as education, healthcare, among other public expenditures to meet public needs.   

In the performance of the economy report for October, the Finance ministry said government expenditure totalled to Shs4.3 trillion.

“This was against a programmed expenditure of Shs3.8 trillion, implying that expenditure was 11.8 percent above target for the month,” the ministry disclosed in the report, adding: “Both expenditure on recurrent items as well as on development projects were higher than the initial plan.”

The Finance ministry also revealed that recurrent spending was Shs2.4 trillion, 0.8 percent higher than the programme for the month. It added that this was mainly on account of non-wage non-interest recurrent expenditure.

This followed a significant increase in the funds released for expenditure for quarter two. For the same reason, domestically financed expenditure on development projects was Shs1.6 trillion.

The Finance ministry said this is almost double the programmed amount for the month of Shs836.7 billion as the government sought to increase execution of development projects.

In the quarter two of this fiscal year, the government released Shs9.1 trillion compared to Shs4.8 trillion it released in quarter one.

Domestic revenues
The Finance ministry said the government projected to collect domestic revenue worth Shs2.1 trillion in October. Of this, Shs1.9 trillion would be tax revenue and Shs162.39 billion non-tax revenue.

“Shs1.9 trillion was collected during the month, implying a shortfall of Shs153.08 billion (7.2 percent below the target for the month),” the ministry noted.

Tax revenue collections amounted to Shs1.8 trillion, translating to a shortfall of Shs109.55 billion (5.5 percent below target) for the month.

The Finance ministry explained that the shortfall was mainly due to underperformance of taxes on international trade transactions under which Shs744.63 billion was collected against a target of Shs878.16 billion, implying a shortfall of Shs133.54 billion. This followed lower-than-anticipated imports on which VAT on imports is levied, as well as less than anticipated petroleum imports during the month.

“Similarly, indirect domestic taxes were lower than the target for the month by Shs42.4 billion, having amounted to Shs490.6 billion vis-a-vis a target of Shs533.15 billion. Both Excise duty and VAT were short of their respective targets by Shs20.08 billion and Shs22.41 billion respectively,” the Finance ministry stated.

On the other hand, direct domestic taxes performed at 112.4 percent, amounting to Shs631.03 billion against a target of Shs561.31 billion for the month.

This was majorly due to Pay as You Earn (PAYE), withholding tax and corporate tax all of which were above what had been targeted for October.