Africa-Press – Uganda. The Ministry of Finance, Planning and Economic Development said on Friday in its economy performance report of February 2021 that the government collected Shs1.414 trillion from domestic sources against a target of Shs1.690 trillion, registering a 16.3 per cent shortfall.
In comparison, in the economy performance report of January 2021, domestic revenues amounted to Shs1.441 trillion representing a performance of 79.7 per cent against the target of Shs1.809 trillion.
Of the total revenue collections, Shs1.390 trillion was tax revenue while Shs51.10 billion was non tax revenue.
In the economy performance report of February 2021, the Ministry of Finance, Planning and Economic Development explained that revenue collections have continued to be affected by the impact of Covid-19 restrictions on economic activities.
“Domestic direct taxes were Shs377.58 billion against a target of Shs456.77 billion with the shortfall mainly recorded under Pay as You Earn (PAYE), corporate tax, withholding tax and the rental income tax. PAYE collections continued to be affected by the covid-19 related layoffs made by firms while low profitability accounts for the underperformance of corporate tax collections,” said the Ministry of Finance.
“In addition, indirect domestic tax collections during February 2021 were Shs367.21 billion against a target of Shs461.25 billion. Under this tax head, excise duty registered a shortfall of Shs35.88 billion while Value Added Tax (VAT) registered a shortfall of Shs58.16 billion, as collections were affected by the lower than anticipated pace of economic activity,” the Ministry of Finance said in the report.
Similarly, the Ministry of Finance stated that taxes on international trade were affected by the lower than projected import demand during the month.
Collections amounted to Shs611.84 billion against a target of Shs675.67 billion, with import duty, excise duty on imports and VAT on imports all falling below their monthly projections.
Regarding the government expenditure, the Ministry of Finance states that total government spending during February 2021 amounted to Shs2.325 trillion, which was 17.1 per cent below the projected levels for the month.
“This performance was largely attributed to the underperformance of the development budget, with both externally and domestically financed development spending being lower than planned. The underperformance during the month was largely attributed to expenditure front-loading by some spending entities undertaken in the first month of the quarter,” said the Ministry of Finance.
It says that expenditure on recurrent activities was 2.2 per cent below programmed levels for the month, driven by lower than anticipated payments for wages and salaries.
However, non-wage recurrent expenditure was higher than planned as there was supplementary spending authorised to local governments for capitation grants and the Micro Finance Support Centre (MSC) for the Presidential Initiative on Wealth and Job Creation (Emyooga).
In the economy performance report of January 2021, the Ministry of Finance indicates that expenditure and net lending amounted to Shs3.614 trillion, which was Shs276 billion or 8.3 per cent above projections for the month, as higher than planned spending on development activities more than offset the underperformance by recurrent spending.
Regarding the development of the real sector (economy), the Ministry of Finance states that the Purchase Managers’ Index (PMI) which measures the views of the business leaders, it says it recorded a value above the threshold of 50, signalling an improvement in economic activity.
During the period, the index rose to 51.2 in February 2021 from 49.8 registered in January and was largely attributed to increased activities following the conclusion of the general elections and the preparations for a wider reopening of schools which prompted rising new orders, employment and output mainly in the agriculture and industry sectors..
It further explained that the Business Tendencies Index (BTI) remained above the 50-mark threshold in February 2021, indicating increasing optimism on doing business by the private sector. The index recorded a value of 52.70 in February, an improvement from 50.37 recorded in January.
