Government in the month of November registered a revenue shortfall of 52.18 billion Shillings against its target for the month.
This is highlighted in the Ministry of Finance monthly report on the performance of the economy released on Monday.
Government through the Uganda Revenue Authority-URA had targeted to collect 1.74 trillion Shillings in November 2021, but domestic revenue collections for the month amounted to 1.688 trillion Shillings hence a shortfall.
“Domestic revenue collections were below target partly due to delays and difficulties in implementation of the new tax measures like the Electronic Fiscal Receipting and Invoicing System-EFRIS and the digital tracking system,” reads part of the report.
Also in October, the Ministry of Finance reported a shortfall in domestic revenue collections noting that URA had collected only 1.538 trillion, representing an 88.6 percent performance against the target for the month. The Ministry then attributed the shortfall to underperformance of all major tax heads and non-tax revenue categories mainly due to the negative impact of the Covid-19 pandemic on the economy.
The new report further reveals that government operations in November 2021, resulted in an overall fiscal deficit of 724.46 billion Shillings which was higher than the planned deficit of 654 billion as domestic revenues were lower than anticipated.
The ministry says that government expenditure in November 2021 amounted to 2.497 trillion, against the plan of 2.568 trillion for the month.
“The lower than planned spending was mainly on account of lower spending on externally financed projects recorded during the month,” the report further reads.
In regard to the performance of the financial sector, the Ministry of Finance reports that the Ugandan Shilling strengthened against the US Dollar by 0.8 percent in November 2021, registering an average mid-rate of UGX3551.5 for 1US Dollars.
“Steady dollar inflows from offshore investors and NGO’s during the month outmatched the limited corporate demand thus appreciating the Shilling,” the report reveals.
The report also reveals that government raised a total of 846.8 billion Shillings from three auctions of treasury instruments held in November 2021. Of the total amount raised, 493.49 billion was used to refinance maturing securities while 353.31 billion was used for financing other items in the government budget, according to the Ministry of Finance.
The ministry also says that commercial banks lending rates on Shilling-denominated credit continued on an upward trend increasing to a weighted average of 19.66 percent in October 2021 from 19.05 percent in September.
The finance ministry says that the upward trend in the lending rates can partly be explained by increased risk averseness among commercial banks.
Meanwhile, government says that economic activity continued to improve following the gradual easing of COVID-19 pandemic related restrictions since July.
Ministry of Finance says that this is indicated in the monthly increase of 1.2 percent in the Composite Index of Economic Activity (CIEA) in October 2021.
“Annual headline inflation increased to 2.6 percent in November 2021 from 1.9 percent the previous month as prices for a number of items like food, fuel, transport and health services faced upward pressures during the month,” further reads the report.
Ministry of Finance says that the increases in domestic prices were also affected by the surge in global oil prices.