Low disbursement of external finance slowdown govt spending

The government spending on development projects was less than it was planned due to low disbursement of external financial resources by the development partners.

Some of the development projects in the country are donor funded, which requires strict accountability from the government.   

The Ministry of Finance, Planning and Economic Development says in the economic performance report of September that the Government expenditure for the month of September 2021 amounted to Shs1.918 trillion representing an 88.9 percent performance against the planned target for the month.

“This performance was mainly attributed to lower than planned expenditure under development projects as only Shs457.35 billion was spent of the planned 1.070 trillion for the month,” said the Ministry of Finance Planning and Economic Development.

Preliminary data shows that government operations during the month of September 2021 resulted into an overall fiscal deficit worth Shs377.4 billion which was higher than the planned deficit of Shs368.54 billion.

The Ministry of Finance, Planning and Economic Development says this was mainly on account of shortfalls in revenue and grants which more than offset the lower than planned expenditure for the month.

Domestically financed development expenditure amounted to Shs319.17 billion against the planned 538.17 billion, representing a 59.3 percent performance for the month.

The Ministry of Planning and Economic Development explains that this was on account of some payments for development projects being frontloaded in the first two months of the quarter.

During the same period, the Ministry of Finance, says external development expenditures registered a 26.0 percent performance as only Shs138.18 billion of the planned Shs532.47 billion was spent.

This was on account of lower than planned disbursements for most of externally financed projects during the month.

On the other hand, wages and salaries amounted to Shs451.04 billion in September 2021 which was higher than the planned Shs371.76 billion as the government cleared pending salary payments for the months of July and August 2021.

Domestic Revenues

“Domestic revenue collected during September 2021 amounted to Shs1.538 trillion, representing an 88.6 percent performance against the Shs1.736 trillion target and therefore, a shortfall of Shs197.94 billion for the month,” the Ministry of Finance said.

Government explains that this shortfall was registered under all the major tax categories and non-tax collections. This performance was mainly on account of the negative impact of the Covid-19 pandemic on the economy and delays in implementation of some of the tax measures proposed in the budget.

Tax revenue collections amounted to Shs1.450 trillion while non-tax revenue collections amounted to Shs 88.01 billion. This was against their respective targets of Shs1.626 trillion and Shs110.26 billion.

However, the Ministry of Finance says despite a Shs27.10 billion surplus under PAYE, Direct Domestic tax collections registered a short fall worth Shs33.77 billion mainly on account of lower than planned collections under corporate tax, rental income tax and withholding tax collections under government securities.

It stresses that during the period, Indirect tax collections were affected mainly by lower than planned performance under VAT on manufactured goods especially beer, spirits & soft drinks and excise duty on phone talk time and internet data. Total collections under this category amounted to Shs342.64 billion against the planned target of Shs485.84 billion for the month.

Taxes on international trade and transactions amounted to Shs 661.01 billion against the planned Shs 681.27 billion for the month.

It says this performance was mainly as a result of lower than planned collections under petroleum duty and import duty. However, VAT on imports registered a Shs29.99 billion surplus as there was a higher than projected imports on which VAT is levied during the month.

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