Govt spending up by Shs647b in June due to public debt, arrears
Finance minister Matia Kasaija reads the National Budget for the Financial Year 2024/2025 at Kololo Independence Grounds on June 13, 2024. Photo/David Lubowa
What you need to know:
- The Ministry of Finance also explains that the higher wages in June resulted from payment of wages and salaries that were due in May 2024 while higher interest payments mainly resulted from an increase in domestic borrowing within the financial year.
Being the last month of the Financial Year (FY) 2023/24, the total government expenditure went up by Shs647 billion due to salary arrears and interest payments on public debt.
In the June economy performance report, the Ministry of Finance says total government expenditure in June 2024 amounted to Shs4.734 trillion against the planned expenditure of Shs4.087 trillion.
The Ministry of Finance said this was largely on account of higher than projected recurrent expenditure in June 2024.
“Recurrent government spending in the month was Shs3.233 trillion, which was higher than the program of Shs2.266 trillion. This performance was largely on account of higher wages, salaries and interest payments as well as other recurrent expenditures,” the ministry noted.
The Ministry of Finance also explains that the higher wages in June resulted from payment of wages and salaries that were due in May 2024 while higher interest payments mainly resulted from an increase in domestic borrowing within the financial year.
Development expenditure stood at Shs1.484 trillion against the planned expenditure of Shs1.793 trillion, representing an 82.8 percent performance. Externally financed project expenditure accounted for 80 percent of this shortfall.
In this case, the Ministry of Finance, said the under spending of externally financed projects expenditure was on account of low absorption of projects as well as failure to fulfill agreed actions by project implementers.
Domestic Revenue revenue collections in June 2024 amounted to Shs3.140 trillion, registering an 86.1 percent performance rate against the target of Shs3.647 trillion with both tax and non-tax performing below their respective targets for the month, according to the finance ministry.
Tax collections in June 2024 generated Shs 3.030 trillion against the planned target of Shs 3.381 trillion, with all tax heads performing below their respective targets. Direct taxes amounted to Shs 1,581.6 billion against the target of Shs1.747 trillion, representing a shortfall of Shs165.6 billion.
The Ministry of Finance, said this performance is largely on account of the temporary halt of business establishment during the strike in April 2024- which impacted on the June 2024 tax returns.
During the period, indirect domestic taxes amounted to Shs598.82 billion during the month, resulting in a Shs103.5 billion shortfall against the target of Shs702.30 billion as both VAT and excise duty performed below their respective targets.
“This performance was largely on account of the extension of penalties and interest on outstanding principal taxes for FY 2022/23 that were expected to be cleared in the month of June 2024,” the Ministry of Finance said.
It further explained that taxes on international trade and transactions registered a shortfall of Shs 85.00 billion with VAT on imports accounting for 70 percent.
However, on the other hand, it said petroleum duty and import duties registered surpluses of Shs 6.8 billion and Shs0.6 billion respectively as traders rushed to file returns on international trade and transactions before the closure of FY2023/24.
