Uganda Sees Budget Deficit Missing Target on Revenue

Uganda’s government may fall short of revenue-collection targets this year, leaving it with a larger budget deficit than forecast, a top economic official said.

Revenue may be as much as 450 billion shillings ($178 million) less than expected in the fiscal year that ends in June, Keith Muhakanizi, the secretary for the Treasury, said in an interview in Kampala today. The Uganda Revenue Authority had projected income for the period at 8.53 trillion shillings.

Government documents obtained by Bloomberg News last month showed the budget gap jumping to 9.1 percent of economic output this fiscal year ending in June, up from 5.6 percent the previous one and more than double the Finance Ministry’s 4.5 percent forecast at the start of the period.

Muhakanizi said Uganda has boosted spending on roads and energy projects to spur economic growth. “We have also taken on many development projects through both domestic and external borrowing” as revenue fell short of targets, he said.

The projects include two hydroelectric plants on the Nile River being developed by Sinohydro Corp. and China International Water and Electric Corp. Uganda’s central bank said last month that the issuing of government debt this fiscal year will exceed the original target of 1.04 trillion shillings.

Muhakanizi said Uganda’s deficit may narrow to 5.5 percent in the next fiscal year as the tax authority “improves its efficiency and the economy is growing.”

Officials predict that Uganda’s $20 billion economy will grow 5.7 percent this fiscal year and 6.8 percent in the next one.

Drought in parts of the country has cut food and livestock production, and conflict in neighboring South Sudan has hurt trade. Uganda, Africa’s biggest robusta coffee exporter, is classified by the World Bank as one of the world’s poorest countries.

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