The Ministry of Finance, Planning, and Economic Development disclosed a significant revenue shortfall of Shs394.60 billion for the government in December 2023. The monthly report on the performance of the economy, released on January 17, revealed that domestic revenue collections struggled due to challenges in tax administration.
In December 2023, domestic revenue collections reached Shs3.059 trillion, falling short of the Shs3.453 trillion target by 11.4 percent. Tax revenue collections amounted to Shs2.902 trillion, against a target of Shs3.268 trillion, resulting in a shortfall of Shs365.79 billion. Major tax categories experienced shortfalls during the month.
Taxes on international trade transactions registered the most significant deficit, with a shortfall of Shs226.67 billion. Despite reaching Shs761.50 billion, it fell short of the Shs988.16 billion target. The underperformance was attributed to lower realized imports than projected for the month, impacting import duty, excise duty, VAT on imports, and infrastructure levy.
Indirect domestic taxes amounted to Shs547.21 billion, Shs104.58 billion below the Shs651.79 billion target. Both Value Added Tax (VAT) and excise duty fell short due to tax administration challenges. Direct domestic tax collections, with a target of Shs1.66 trillion, were short by Shs23.11 billion. Shortfalls in withholding tax offset surpluses in PAYE, corporation tax, and rental income tax.
In terms of public expenditure, the projected government expenditure for December 2023 was Shs3.155 trillion. However, actual expenditure amounted to Shs2.690 trillion, achieving 85.3 percent against the monthly plan. Both recurrent and capital expenditure categories performed below 100 percent.
Recurrent item spending during the month was Shs1.735 trillion against a plan of Shs1.813 trillion, with wage payments and non-wage payments lower than initially programmed. Development expenditure was Shs384.27 billion (28.8 percent) less than planned, primarily due to the externally financed component performing at only 39.3 percent.
The domestically financed component of development expenditure exceeded the initial plan, reaching 114.1 percent. This increase was partly attributed to a substantial increment in funds released in Q2 to compensate for the low release in quarter one for this category.
