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    Land Conflicts and Revenue Shortfalls Impact Government Programs

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    Land Conflicts and Revenue Shortfalls Impact Government Programs
    • November 1, 2024 • 19 hours ago
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    Land Conflicts and Revenue Shortfalls Impact Government Programs

    KAMPALA, UGANDA | The Ugandan government reported lower-than-expected net borrowing in September, marking the end of the first quarter of the financial year. This decline was largely due to sluggish project implementation and reduced availability of external aid, rather than improved domestic revenue generation, which also fell short of expectations.

    According to the Ministry of Finance, Planning and Economic Development, the government had a net borrowing of 496.8 billion shillings for September, falling short of the programmed 745.85 billion. The ministry's monthly performance report indicated that this was mainly due to lower-than-anticipated expenditures, with both overall spending and net acquisition of non-financial assets not meeting their respective targets.

    The Uganda Revenue Authority (URA) reported tax collections of 2.1 trillion shillings for September 2024, supplemented by 174.72 billion from non-tax revenues and 59.51 billion from grants, totaling 2.34 trillion shillings. However, this fell short of the target of 2.186 trillion shillings by 81.3 billion, illustrating that revenue shortfalls were offset by reduced expenditures.

    All major revenue categories underperformed, albeit to different degrees. Taxes on income, profit, and capital gains missed targets by 58.71 billion shillings, while taxes on international trade and transactions fell short by 27.7 billion. Conversely, taxes on goods and services were closer to target with a shortfall of just 3.87 billion shillings, and non-tax revenues achieved 98.5 percent of their target, missing by only 2.7 billion.

    Despite the September shortfall, cumulative domestic revenue collections since the start of the financial year on July 1 have exceeded expectations, totaling 6.91 trillion shillings—109 billion more than the targeted 6.804 trillion. However, anticipated project grants have been challenging to secure, with over 60 percent of expected funding not realized.

    The Ministry's report highlighted that only 59.5 billion shillings of the projected 152.2 billion from development partners was received in September. Government expenditures for the month totaled 2.69 trillion shillings, which was under the planned 2.76 trillion, reflecting a performance rate of 97.7 percent.

    Expenditures that fell below expectations included employee compensation and purchases of goods and services. In contrast, spending on government grants and social benefits exceeded plans, with grants to local governments reaching 676.9 billion shillings—62 percent more than expected—and social benefits expenditures at 60 billion, surpassing the planned 56.7 billion shillings.

    The government successfully met its interest payment obligations, with domestic and external interest totaling 631.3 billion shillings. Delays in the preparation and disbursement of grants and social benefits resulted in some funds being carried over from earlier months. Meanwhile, some expenditures for goods and services were advanced in the first two months of the quarter.

    For net acquisition of non-financial assets, the government spent 142.22 billion shillings against a plan of 503.2 billion, representing a shortfall attributed to land disputes and other project execution challenges. “The underperformance (by 71.7 percent) in this area was partly due to valuation disagreements between the government and landowners, alongside lengthy procurement processes,” stated the ministry.

    Last week, the Ministry of Finance allocated 15.99 trillion shillings for the second quarter, with key funding directed towards debt and treasury operations (5.6 trillion shillings). Other allocations included nearly 2 trillion for salaries and wages, 3.71 trillion for non-wage recurrent expenditures, and 4.60 trillion for development projects in infrastructure, health, and agriculture.

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