Govt posts a Shs23 billion revenue shortfall in August

The Finance ministry’s latest monthly economy report has revealed that the total revenue for August 2024 amounted to Shs2.477 trillion against the programmed target of Shs2.499 trillion. This means the Treasury registered a shortfall of Shs22.77b. The ministry says this was largely due to lower-than-planned grants and other revenue which registered shortfalls of Shs34.42b and Shs35.31b respectively.

The report reveals that project grants registered a shortfall of Shs71.51b which more than offset the surplus of Shs37.08b registered under budget support grants.

“The surplus under budget support grants was on account of disbursements from USAID to support regional referral hospitals,” the ministry disclosed in the report.

Computed statistics indicate that tax collections for the month amounted to Shs2.195 trillion against the target of Shs2.148 trillion, posting a surplus of Shs46.96b. This translates to a performance rate of 102.2 percent by the taxman.

This performance was attributed to surpluses in taxes on income and profits and trade taxes on goods and services, which amounted to Shs61.44b and Shs21.87b respectively. On the other hand, taxes on international trade registered a shortfall of Shs36.35b.

About the expenses in August 2024, the Finance ministry says expenses amounted to Shs3.005 trillion against the programme of Shs2.988 trillion compensation of employees, and purchase of goods and services. Social benefits, it adds, were below programme while grants and other expenses were above programme.

“The performance under other expenses is attributed to many subventions receiving transfers at the end of the month. Compensation of employees during the month of August 2024 amounted to Shs521.08b against the plan of Shs665.43b,” the report reads in part. 

The report reveals that the purchase of goods and services was lower than the planned Shs688.83b. This was partly due to delays in procurement processes by agencies. Elsewhere, grants amounted to Shs1.132 trillion, indicating a 130.9 percent performance against the programmed target. This was on account of transfers to extra-budgetary institutions. A grant of Shs505.19b was, for one, released to the Local Government of which Shs279.3b and Shs128.9b were for recurrent and development expenditure, respectively.

Shs268.05b was used to acquire non-financial assets during the month of August, against a target of Shs730.81b. This, the ministry says, was due to lower releases for development expenditure than originally appropriated for quarter one, and lower disbursements for externally financed projects.

Overall, the fiscal development indicated by the Finance ministry has indicated that government operations during August resulted in a net borrowing of Shs796.68b as compared to the programme target of Shs1.219 trillion. 

It also points out that this was on account of lower than the projected net acquisition of non-financial assets which registered 36.7 percent performance.

Economic activity during August indicates that economic activity continued to increase following a pick-up in consumer demand, which further boosted confidence in business conditions as indicated by the Purchasing Managers’ Index (PMI) and the Business Tendency Index (BTI) in August.

Despite a slight decline in the Composite Index of Economic Activity (CIEA) to 165.89 in July from 166.22 the previous month, the PMI and BTI in August indicated growth in economic activity. The PMI increased to 56.3 in August, up from 53.7 the previous month. This growth indicates continued improvement in private sector performance.