Imports like fuel have fallen sharply
Government revenues – taxes, grants and non-tax revenues –
suffered the hardest beating in April falling below target by a whopping 789.8
billion Shillings, the clearest indicator of how the coronavirus has battered
the Ugandan economy.
According to the Ministry of Finance Performance of the
Economy Report for April 2020, everything was below target. In its projections,
the government had hoped to receive at least
1.8 trillion Shillings in total but could only manage to collect 965
For taxes, the government had planned to collect 1.5
trillion Shillings but only managed to get 931 billion Shillings– registering a
547 billion Shillings shortfall, one of the biggest seen in a single month in
recent times. On grants, the money that comes from donors to support the
budget, the government received a paltry
28 billion Shillings against the 128 billion Shillings target.
The non-tax revenue, the money government gets from other
sources other than taxes like passport fees and market dues were 6 billion
Shillings compared the targeted 107 billion Shillings in April. The collections
in April reflect a crash in business as the government closed shops, people
stayed home, and some companies fired employees or cut salaries to survive the
In the finance report, the government says that import taxes
had the biggest shortfall of up to 314 billion Shillings with companies in
origin countries or destination countries remaining closed for the much of the
month as countries struggled to control the virus.
Finance says this shortfall was due to a reduction in
dutiable imports during the month arising from the effects of COVID-19 on
trade.” Fuel imports make a key component in this area but most importers of
fuel say retail demand has fallen by 90 per cent which calls no need for
Taxes levied on such goods as beer, spirits and sugar were
also lower than anticipated. Bars, restaurants, and other happening places
where these are consumed most have been shut for the last two months.
The finance report adds that direct domestic tax collections
were lower than the target by Shs 71.87 billion as Pay As You Earn (PAYE),
the corporate tax, withholding tax, presumptive tax and rental incomes tax were
lower than programmed.
The report says these falls are “partly due to the effect of
COVID-19 on the economy that resulted in temporary laying-off of some workers
and/or salary cuts, reduced the profitability of firms and reduced payment of
rents by tenants.”
Non-Tax Revenues, which is usually collected on such things
as passports and other charges by government agencies was affected by the
temporary closure of Ministries, Departments, and Agencies (MDAs) that offer
services on which NTR is charged.
Low revenues meant the government had to borrow for most of its
activities. According to the report, the government spent more 1 trillion
Shillings than it could collect– also referred to as fiscal deficit. The
government had planned for a fiscal deficit of just 712.04 billion Shillings.
The higher deficit was due to the shortfalls in revenues and grants, the report
The government this month received a loan from the
International Monetary Fund and has written to the World Bank and the African
Development bank for money to cover the low revenue plans.