Gov’t revenue and grants continue to underperform -report

By George Mangula

Government’s total revenue and grants continue to underperform since the start of the financial year 2019/2020, according to the Ministry of Finance’s December 2019 Performance of the Economy Report now in circulation.

According to the report, in December 2019 revenue amounted to Shs2, 239 billion performing at 95 percent against the target of Shs 2,351 billion. The low performance, according to the report, emanated from both domestic revenue and grants which fell short by Shs. 4 billion and Shs 108 billion respectively when compared to their monthly projections.

However the report notes that total amount of revenue and grants increased by 23 percent when compared to the same period last financial year.

Grants fall below target

The report says government expected to receive Shs 156 billion in form of budget support and project support grants during the month. However, according to the report, only Shs48 billion for project support was received mainly on account of slow implementation of externally financed projects that trigger donor disbursements.

Domestic tax revenue better target

According to the report, domestic revenue collections totalled to Shs. 2,191 billion of which taxes amounted to Shs 2,126 billion and non-tax revenue amounting to Shs. 65 billion. Tax revenue performed at 103 percent posting a surplus of Shs53 billion while non tax revenue posted a shortfall of Shs57 billion against the target of Shs123 billion. The report attributes good performance in tax revenue mainly to corporate tax which registered a surplus of Shs229 billion as many corporations filed end year returns while the performance of non-tax revenue was partly explained by the exemption of some institutions from remitting Annual Investment Allowance  (AIA)  collections through the URA to the consolidated fund. The institutions had been included in the projections at budget time.

Govt expenditure

According to the report, total government expenditure amounted to Shs1, 540 billion, a performance of 61 percent when compared to the program for the month. The performance was on account of low development expenditure that performed at only 33 percent against its target. However current expenditure was above target exceeding the program by 3 percent mainly due to expenditure pressures experienced within the month.

“The low performance of development expenditure was majorly caused by externally financed projects which received low disbursements amounting to only Shs208 billion representing 21% of the programmed amount. This was due to the slow implementation of these projects that prompt additional disbursements. In addition, low payments in the domestic development expenditure were due to front loading,” says the report.