UGANDA, Kampala | Real Muloodi News | A recent monetary policy report by the Uganda Central Bank shows that contrary to Uganda Revenue Authority targets, net tax collections from July 2020-March 2021 was short Shs1.78 Trillion. This is considerably below the projected 16.1 Trillion. Yet, collections still grew by 6.7 per cent compared to the 2019/20 financial year.
However, relative to the approved target, the Bank of Uganda shows total Government revenue, including grants in FY 2020/21, reached Shs13.924 trillion reflecting a surplus of Shs448.8 billion.
Bank of Uganda, speaking to Daily Monitor, stated, “This was largely because of the downward revisions of revenue target for 2020/21 resulting from the adverse effects of the coronavirus pandemic. Therefore, the over performance of revenues relative to the target may not mean higher revenue collections due to improved economic fundamentals.”
In the same 8-month period, the Bank of Uganda also states how grant receipts reached Shs1.219 trillion, Shs93.3 billion lower than in the budget, while domestic revenue was Shs12.704 trillion, Shs541 billion higher than in the approved budget.
Due to the underperformance in development expenditure, total government expenditure for the eight months of FY 2020/21 amounted to Shs23.201 trillion, Shs3.442 trillion lower than the programmed expenditure.
The shortfall in development expenditure resulted from the slow absorption by some government projects. Similarly, the Bank of Uganda stated annual total government expenditure grew by 17.5 per cent. Yet, there was still a resulting fiscal deficit of Shs.9.276 trillion, 3.891 trillion lower than programmed expenditure, primarily attributed to underperformance of the development sector.
Notable too was that the domestic sources largely financed the deficit, which led to an increase in the stock of domestic debt by 29.0 per cent to Shs23.545 trillion by year-end February 2021.
Bank of Uganda also reinstated confidence, noting how Uganda’s total public debt remained sustainable in the medium to long term stating, “Indeed, we expect nominal debt to increase from 41.0 per cent of GDP in FY 2019/20 to 51.9 per cent of GDP in FY 2022/23 and decline after that. However, the bank expects a 27 per cent increase to FY2020/21 debt service to domestic revenue ratio, compared to 22 per cent in FY 2019/20.
The bank projects an average 30 per cent debt service to domestic revenue increase over the next two years. As a result, other priority expenditures may lose out.
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