The Government of Uganda suffered a budget deficit worth Shs1.257.84 trillion in June 2021 as the effects of the Covid-19 lockdown takes toll on the economy.

According to the June 2021 report by the Ministry of Finance, Planning and Social Development, this budget deficit was higher than the planned deficit of Shs164.28 billion.

“This was on account of shortfalls in revenue and grants coupled with higher than planned expenditure incurred during the month,” the report indicates.

Government collected revenues worth Shs2.161.02 trillion in June 2021, representing a shortfall of Shs336.70 billion or 13.5% against the target. Of this, Shs2,101.10 trillion was tax while Shs59.93 billion was non-tax revenue.

All major tax heads registered shortfalls against their respective targets, as collections were affected by the implementation of restriction measures to curb the resurgence of Covid 19 during the month.

Direct domestic taxes amounted to Shs1.122.55 trillion, representing an 87.0% performance rate against the target for the month.

“This performance was partly on account of the underperformance of corporate tax collections as firms encountered low profitability amidst challenges posed by the second lock down,” the report adds.

Indirect taxes registered a 92.9% performance rate, as both excise duty and VAT registered shortfalls for the month. The underperformance by indirect taxes is partly attributed to a slow-down in demand for taxable products. Taxes on international trade amounted to Shs 645.00 billion, representing a performance rate of 91.2% against the monthly target. This was mainly on account of shortfalls in import duty, withholding taxes and infrastructure levy as result of lower import demand during the month, which was partly linked to the on-going lockdown.

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