Gov’t misses March revenue collections target by 16.8 percent

By George Mangula

The Ugandan government failed to hit its revenues target for the month of March 2020 by 16.8 percent (or Shs278.67 billion) of the planned Shs1, 662.17 billion, as both tax and non-tax revenues fell short of their respective targets during that month, according to the latest Performance of the Economy Report published by the Ministry of Finance

According to the report, tax revenue which is collected by Uganda Revenue Authority (URA) totalled Shs1, 295.55 billion or 85.6 percent of the target for the month while non-tax revenues performed at 59.3 percent against the monthly target.

“The performance of revenues during the month was affected by the global domestic responses, including transport and trade restrictions following the outbreak of Coronavirus pandemic,” says the report, adding that international trade taxes were affected by a reduction in the volume of imports due to the global supply chain disruptions.

Trade tax collections, the report further says, amounted to a shortfall of Shs91.40 billion or 14.4 percent below the target for the month.  Similarly, it adds, restrictions imposed within the domestic economy to curb the spread of the virus had a negative impact on domestic taxes.  Direct domestic taxes registered a shortfall of Shs87.12 billion or 17.2 percent against the target, as corporate taxes, PAYE, and withholding tax – the three largest items in the tax head underperformed. Similarly, indirect domestic taxes registered a shortfall of Shs44.33 billion or 11.2 percent against the target owing to reduced sales and a general decline in demand during the month. 

Excise duty on the major consumables like beer, soft drinks, spirits, and cement) was lower than earlier projected, while lower consumption affected Value Added Tax (VAT) collections, the report says. 

Gov’t planned expenditure declines

According to the report, government spending during March 2020 totalled to Shs1, 603.11 billion, resulting into a 78.5 percent performance rate against planned levels for the month. The ministry attributes the underperformance to lower than expected execution (45.8 percent) of development spending for the month. This performance is explained by two main factors; firstly, a portion of spending on domestically financed projects initially planned for March was front-loaded and undertaken earlier during January and February. Secondly, the global and domestic restrictions on movements affected execution of a number of externally financed development projects. 

However, low execution on development spending was partially offset by higher execution on recurrent activities, which was 20.5 percent above planned levels for the month.  Expenditures on non-wage recurrent activities and debt service obligations were 37.4 percent and 31.9 percent, respectively above planned levels for the month.

Uganda registers trade surplus with East Africa

According to the report, in the month of February 2020, Uganda registered a trade surplus of US$54.99 million compared to a deficit of US$1.32 million recorded January 2020. Uganda exported merchandise worth US$ 141.52 million (US$ 32.56 million more compared to January 2020) and imported merchandise worth US$86.53 million. Exports increased by 29.9 percent while imports decreased by 21.5 percent when compared to January 2020.

On a country specific level, Uganda traded at surplus with all East African Partner States except for Tanzania. Kenya remained the biggest destination of Uganda’s exports and the largest source of her imports. South Sudan was the second largest destination of Uganda’s exports while Tanzania was the second largest source of Uganda’s imports.