However, despite these spending and revenue outturn shortcomings, the performance of the 2017/18 financial plan during July-September was better compared to the corresponding period in 2016/17 although by small margins.
Total revenue in Q1, which increased by one per cent to nearly 4.1trn/- compared to collections during the same period in 2016/17, was 15 per cent less of the estimated 4.79trn/- for the quarter. Total government spending during the period increased by 2.7 per cent compared to the performance in the previous fiscal year but the expenditure was equivalent to only 62.9 per cent of the estimated 6.59trn/- for the period.
According to the Budget Execution Report for the First Quarter of 2017/18 (July – September, 2017), Treasury attributes the below target expenditure performance in the to several factors, including low disbursement in some votes, which was contributed by underperformance in revenue sources especially non-tax revenue, grants and non-concessional borrowing.
“The below target execution of wages and salaries was mainly on account of low recruitment of new employees than anticipated in the first quarter, while the underperformance in other charges was a result of shortfalls of both domestic and external financing sources,” the Ministry of Finance and Planning notes in a new report.
The budget report has it that factors which contributed to missing of domestic revenue targets in quarter one included decline of sales of goods for local markets faced by companies producing cigarettes, bottled water and alcohol having caused poor performance in the excise duty category.
On income tax, Treasury says the underperformance was due to the retrenchment of workers in some of the companies due to slowdown of activities which caused the underperformance of pay-as-you-earn (PAYE) and the skill development levy (SDL). Similarly, it adds, the underperformance of the withholding tax was caused by slowdown of exploration activities by oil and gas exploration companies.