The Government made a fiscal deficit of 1.017 trillion Shillings in the month of May following a realization of less revenues than planned.
A fiscal deficit happens when government operations for a particular period take more money than the revenues realized in the same period, necessitating it to borrow to fund the programmes.
The resultant net borrowing is equivalent to the fiscal deficit.
The operations for the month had been planned to return a fiscal deficit of 763.46 billion but the revenue realized, including tax and non-tax revenues as well as grants, fell short of what had been planned, according to the Ministry of Finance, Planning and Economic Development.
The deficit also defied the less-than-planned spending on non-financial assets by the government.
According to the Uganda Revenue Authority, total revenue collected was below target by 468.33 Billion Shillings, reflecting 16.4 percent off the target for the month.
Yet, total expenditure underperformed by 215 billion or 5.9 percent of the plan for the month).
“Borrowing is inevitable for almost all governments. “That is why a fiscal deficit is included in the budgeting process,” says Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury.
Revenue Performance
Total government revenue in February 2025 amounted to 2.383 trillion shillings against the target of 2.851 trillion, resulting in a shortfall of 468.3 billion.
This shortfall was registered under both tax and other revenues as well as grants from development partners.
Tax collections during the month amounted to 2.081.3 trillion instead of the targeted which was 2.22 trillion as all major tax categories were registered.
Shortfalls during the month.
The biggest shortfall of 96.17 billion was registered under taxes on international trade transactions, especially due to a shortfall in petroleum imports, which affected Petroleum Duty collections.
Other shortfalls were recorded under Value Addition Tax on imports which affected the overall VAT on imports during the month.
Taxes on incomes, profits and capital gains were also lower than target by 35.6 Trillion Shillings, especially due to lower Pay As You Earn (PAYE) collections than had been planned.
This is in turn blamed on the collections in the private sector, where a reduction in remittances from some top taxpayers was registered.
Shortfalls were also recorded on net taxes on goods and services, amounting to 5.44 billion with excise duty short of target by 3.72 billion, while net VAT was short by 1.72 billion Shillings.
Expenses
During the month, government expenses amounted to 2.84 trillion shillings against a planned 2.82 billion, representing a slight performance rate of 100.8 percent.
The more than planned spending happened largely because of expenses the central government grants to local governments, tertiary institutions and regional referral hospitals amounted to 571 billion out of the targeted 292.08 billion Shillings.
The grants rose beyond the target “as the government continues with its commitment towards service delivery,” said the Economic Performance Report by the Ministry of Finance.
Expenses on social benefits and the other expenses category were also higher than programmed for the month.
On the other hand, total expenses on compensation of employees for the month were lower than planned, mainly on account of allowances.
However, wages and salaries were slightly higher than programmed during February on account of supplementary expenditures passed for this item.
On the acquisition of non-financial assets during the month, the Government spent a total of 556.14 billion, which was lower than the planned 793.71 billion Shillings.
The funds under this went mainly towards land for railway transport projects, road infrastructure, sports facilities, water facilities, among others.
Ultimately, total expenditure, which is the sum of expenses and net acquisition of non-financial assets, amounted to 3.4 trillion shillings against a plan of 3.
6 trillion, implying a 94.1 percent performance.