Govt registers shortfalls in all revenue segments
The revenue shortfall expanded in September to Shs176.65b from Shs23b in August. Photo / File
What you need to know:
- During September, revenue targets were less by Shs176.65b with the biggest shortfall registered under project grants.
Government registered shortfalls in all revenue segments in September, signaling continued difficulty in meeting tax targets.
In its performance of the economy report the Ministry of Finance noted revenue targets were less by Shs176.65b with the biggest shortfall registered under projects grants.
Total revenue stood at Shs2.3 trillion, of which Shs2.1 trillion was generated from taxes, Shs174.7b from non-tax revenue and Shs59.5b project grants.
“All the revenue categories were short of their respective targets albeit in varying degrees,” the report reads in part, noting that government had projected to realise Shs2.26 trillion from taxes, but realised Shs2.18 trillion due to shortfalls in income, profit, and capital gains taxes of Shs58.71b and taxes on international trade and transactions of Shs27.7b.
However, taxes on goods and services were closer, missing the target by Shs3.87b, while other non-tax revenues, were short by Shs2.69b. The report also noted that cumulative domestic revenue collections since the start of the financial year, were, however, above target, realising Shs6.9 trillion, against a target of Shs6.8 trillion.
Data also further shows that government operations in September resulted in a net borrowing of Shs496.81b, which, was however, lower than the Shs745.8b programmed due to lower than projected expenditure with both expenses and net acquisition of non-financial assets below programmed amounts.
Earlier, Mr Moses Kaggwa, the Ministry of Finance director economic affairs, said despite some shortfalls domestic revenues were performing well, with a projection of improving in the remaining part of the year.
During the month, project grants performed poorly, missing the target by Shs92.68b to Shs59.5b out of the projected Shs152.19b.
Total government expenses amounted to Shs2.69, which was slightly lower than the planned Shs2.75 trillion due to subcategories that performed below expectations such as compensation of employees and purchase of goods and services.
The Ministry of Finance also noted that due to persistent budget deficits, government continued to face financing pressure, issuing treasury bills and bonds to raise money from the domestic money market.
Government raised Shs1.64 trillion from two treasury bills and one bond auction, with Shs539.8b mobilized from treasury bills, while Shs1 trillion was raised from the bonds.
At least Shs630.69b went towards refinancing maturing debt, while Shs1 trillion went toward financing other items of the budget.
Treasury bills' interest increased in September, with the 364-day,182-day, and 91-day tenors increasing to 14.4 percent, 13.4 percent, and 11.1 percent, respectively.
The increase was from 13.7 percent,13.1 percent, and 9.5 percent in August, respectively.
The report also indicates that although all auctions for treasury bills remained oversubscribed, the average bid-to-cover ratio reduced to 1.75 in September compared to 1.96 in August.
Government also issued three bonds of two, five, and 15 years, for which interest rose to 15.5 percent, 16 percent, and 16.5 percent in September from 15.2 percent, 15.5 percent, and 15.8 percent, respectively.
